Asda has come up with a novel answer to the issue of pay, which has become a pressing cost concern for the industry.

In what is thought to be a pioneering initiative in retail, the grocery and general merchandise giant is offering staff a choice of pay rate and associated contractual terms.

Employees can opt for £8.50 an hour – £1 more than the national living wage as of April 1 – in return for greater flexibility in their roles and the loss of some existing benefits such as paid breaks.

If they want to stick to their existing contracts, that’s absolutely fine. But in that case they will be paid £7.50.

It looks like a canny move by Asda, which has learned lessons from the controversies that embroiled B&Q and Marks & Spencer when they made changes to pay and terms that were perceived as management impositions.

”The retailer has also been smart to win backing for its proposals from the GMB trade union, which has welcomed the voluntary aspect of the scheme”

And, according to Asda, 95% of its staff would be better off under the new contracts.

The retailer has also been smart to win backing for its proposals from the GMB trade union, which has welcomed the voluntary aspect of the scheme.

Endorsement by a union which has frequently been willing to take on retailers indicates that Asda has played fair.

That innovative approach should help ensure that staff are on board and up for the challenge as Asda ploughs on with its turnaround.

There are signs that progress is being made. While Asda was the only grocer to suffer a sales fall in the most recent Kantar data, the rate of decline of 0.8% was not big – the retailer’s best in fact since November 2014.

As well as addressing the need to get the most bang for its buck from staff, the changes to pay and terms should allow the retailer to better serve shoppers.

The greater flexibility means, for instance, that colleagues will move around the store and vary tasks dependent on where help is most needed.

By combining a push for greater productivity and better customer service with genuine choice for staff, Asda may have shown a way forward for other retailers.

Productivity challenge

On our website this week we’ve ranked the top 30 retailers by productivity.

It will come as no surprise that, without bricks-and-mortar stores and all the overheads associated with them, online retailers dominate the upper echelons. Asos, with annual sales per employee of £542,379, takes the number-one spot.

It’s another reminder of the increasing pressures on profitability that many retailers face, from staff costs to business rates, and the need to get more out of stores.

That’s why it makes sense, as the John Lewis Partnership is doing, to invest in existing shops and strive to make the most of their distinct appeal and better deploy technological opportunity – whether it’s an enhanced foodservice offer at Waitrose or equipping staff with iPhones in John Lewis department stores.

The store is certainly not dead, but its place in contemporary retail is a work in progress. There will no doubt be imaginative new ideas to come.