Business is tough at supermarket retailer Asda and further challenges lie ahead. The subsidiary of Walmart said it’s investing 500 million pounds ($707.9 million) to lower price to combat projected pressure and leaders are leaving amid what Asda is calling a “radical shake-up.”
One day after the company said it would axe up to 300 jobs in its Leeds, U.K. head office, Fiona Lambert, vice president of own label development for Asda’s apparel and homewares brand, George, stepped down from her role.
No details about Lambert’s departure have been disclosed, but Asda said she leaves with its best wishes for the future.
Company CEO Andy Clarke said he’s expecting another year of “intense pressure” against the “turbulent” economic backdrop, and that the retailer has to transform the way it buys product and improve quality to see success in 2016.
In one step toward the transformation, Asda will become a member of Europe’s leading buying alliance, EMD, which will help the company focus on developing its own label ranges.
The new buying approach is expected to release what Asda called “significant” savings from its supply chain.
“These savings will permanently benefit customers through price cuts and further investment in quality,” the company said in a statement.
The 500 million pound commitment adds to the original 1 billion pound investment Asda made across five years to 2018 and will further reinforce the company’s value proposition as it widens the price gap with competitors.
“Fundamentally changing how we buy products means we can realize significant savings from our cost base and pass these directly to customers through a rebased pricing model,” Clarke said.
Asda is cautious coming into this new year, and Clarke said sales will remain under strain from price deflation, a continued competitive background and radically changing consumer shopping habits.
“We know our customers better than anyone else and we need to structure our offer to meet their changing needs,” Clarke said. “This knowledge has shaped our plans to make our bigger stores easier to shop, laying them out in a way that’s relevant to today’s customers by removing fringe, marginal ranges, significantly investing in our own label ranges and providing services that they need.”