Proposed Contract Change To Hit Pay Of Asda Staff

Around 7,000 Asda workers are facing a potential cut in their pay as the debt-laden supermarket group seeks further cost savings.

The company is consulting with staff at 39 stores outside the M25 but near the capital about losing their 60 pence per hour ‘location supplement’ to bring their pay in line with its other stores around the country.

Asda’s owners, the Issa brothers and private equity firm TDR Capital, have been looking to make savings across the business after the cost of servicing the debt on their £7bn acquisition soared as interest rates rose. They are reportedly working on plans to merge the supermarket with their petrol forecourts business EG Group in a move designed to reduce their joint debt burden.

The GMB union claimed that those that do not agree to the pay change will have the new contract imposed on them and could be dismissed if they refuse to sign. The union, which represents many of the supermarket’s workers, stated that the proposed pay cut was “classic private equity slash and burn tactics” ahead of the potential £11bn merger with EG.

Nadine Houghton, GMB organiser, said: “Cutting the pay of 7,000 low-paid retail workers during a cost of living crisis is inexcusable.”

She also called on the government to block Asda’s proposed tie-up with EG, stating that it would be “bad for workers, bad for consumers and bad for the high street”.

Houghton added: “These slash and burn tactics, along with food and fuel price increases, will only ramp up if the merger goes ahead.”

In response, Asda stressed that no final decision had been made on the pay cut for the 7,000 staff, but it was considering making the change as none of its rivals paid a similar supplement in those areas.

A spokesperson said: “We are holding a collective consultation in a small number of stores outside the M25 where colleagues are currently paid a legacy location supplement.

“This supplement is out of line with the wider retail market and has created an anomaly where some Asda colleagues in stores that are close together are paid different rates. As part of this consultation, we are discussing a compensatory payment for colleagues in return for the removal of this location supplement, if the proposal goes ahead.”

NamNews Implications:

• There could will be troubles ahead…
• Especially given the assumption that an unanticipated rise in interest rates from 1% to 4.5%+…
• …should be funded via workforce wages.
• Although this is a different business model, the JLP reduction/non-payment of bonus will be a big demotivator.
• …at least!

#Interest #DebtBurden #Inflation

Every little bit of availability helps…

Every little bit of availability helps…

(Tesco, Hove 1347 - Saturday 20/5/2023)

#Availability #SupplyChain #OOS

Leading Mayonnaise Brand Adopts Shrinkflation To Offset Higher Input Costs

Unilever’s Hellmann’s mayonnaise line has become the latest brand to adopt the shrinkflation tactic to counter increased production costs.

According to trade publication The Grocer, Tesco has stopped selling 800g jars of Hellmann’s Real and Light mayonnaise that used to sell for £3.60. This has been replaced with a smaller 600g variant with a higher shelf price of £3.75.

The report noted that the move means the leading mayonnaise brand is now 37.8% more expensive per 100g than it was previously when sold in 800g jars.

A spokesperson for Unilever is quoted by The Grocer saying: “Our Hellmann’s Real Mayonnaise jars are available in four sizes to suit varying shopper preferences and needs. This includes our 600g jar, which is available alongside our 800g, 400g and 200g jars.

“Although we are currently experiencing significant increases in input costs, including the costs of the quality ingredients used to make Hellmann’s mayonnaise, we will always try to absorb as much of the cost pressure ourselves and look for savings within our own business before passing on pricing to consumers.”

NamNews Implications:

• Presumably, the price increases are being applied, pro rata across all sizes…
• i.e. the loyal Hellmann’s user is being asked to take a 38.7% price increase…
• …and has the options of switching to an alternative brand, an own label or a discounter.
• (interesting to assess the cost of retrieval for those that vote with their feet…)

#Shrinkflation #PriceIncrease #CostOfLiving

Grocery Inflation Inches Lower

Despite recent suggestions that cost pressures are easing, latest Kantar data confirms that grocery price inflation remains exceptionally high.

However, it did fall for the second month in a row, inching down from 17.3% to 17.2% for the four weeks to 14 May. Take-home grocery sales rose by 10.8% on the same period as last year, with the discounters continuing to outperform the traditional Big Four supermarkets.

Fraser McKevitt, head of retail and consumer insight at Kantar: “The drop in grocery price inflation, which is down by 0.1 percentage points on last month’s figure, is without doubt welcome news for shoppers but it is still incredibly high – 17.2% is the third fastest rate of grocery inflation we’ve seen since 2008, an extra £833 to annual grocery bills”.

Savvy shoppers are choosing more own-label goods, growing by 15.2% this month, compared to 8.3% for branded. But the brand premium gap is narrowing in most stores via loyalty discounts.

McKevitt continued: “In the fierce contest for market share, eyes have been on the dairy aisle in particular, where the average cost of four pints of milk has come down by 8 pence since last month. Prices are still much higher than they were 12 months ago, at £1.60 currently versus £1.30 last year, but retailers know just how important it is to offer even small savings on staple products like milk to get customers through the door.”

Waitrose benefited from a substantial uplift in the week of the coronation, with sales up 4.8% over the 12 wks, its highest growth since April 2021.

Aldi was the fastest-growing this month, with sales increasing 24.0%. Lidl’s sales rose 23.2%, and together accounted for 17.8% of the market.

Asda won back market share to 13.9% after sales grew 10.6%. Sales were boosted by its Just Essentials range, with nearly two in five Asda baskets containing at least one of these value items this May.

Morrisons recorded a third consecutive period of sales growth, although the increase was more muted versus others at just 0.6%. The grocer relaunched its ‘More Reasons to Shop’ strapline yesterday as part of its efforts to win back shoppers.

Sales increased by 8.9% at Tesco, with growth across its convenience stores, large format supermarket and online channels. Sainsbury’s sales rose by 10.5%, and it held market share steady at 14.8%.

NamNews Implications:

• Inflation of 17.2% is still off-putting for brands…
•  …but encouraging for own-label and the discounters.
• i.e. Aldi & Lidl combined share of 17.8%…
• …and growing at 24%.
• And own-label growing a 2x the rate of brands.
• These stats raise two essential questions for branded suppliers:
• How to safely optimise own-label potential?
• How to find ways of optimising Aldi & Lidl traffic?
• These two options are becoming too big to ignore.
• On any count…

#MarketShare #Discounters #OwnLabel