The GMB union has called on the owner of Asda to take “urgent action” to protect jobs amid signs the supermarket is “in a fight for survival”.
On Tuesday data revealed sales at Asda fell 6% in the three months to 4 August, despite continuing grocery price inflation, taking the retailer’s share of the UK take-home grocery market to 12.6% – the lowest level in at least 13 years.
The 1.1 percentage point drop marks the fifth month of declining market share for the retailer in the index compiled by analysts at Kantar, with the pace gradually accelerating.
The big slump in market share – from 13.7% in the same period a year before – comes amid a chaotic period at the top of the group, which was bought by the billionaire Issa brothers from Blackburn and private equity firm TDR Capital for £6.8bn in October 2020.
Zuber Issa is selling his 22.5% stake to TDR while his brother Mohsin will retain his stake but is expected to step back from day-to-day running of the business when the deal completes in the autumn.
Nadine Houghton, national officer for the GMB union, which represents thousands of Asda staff, said the union would write to government ministers to “raise our concerns around job protection and value for consumers”.
She said TDR Capital had “heaped debt on to this British institution and now the rot is creeping in” and “urgent action” was required to protect jobs. She added that cutting staff hours had led to lower standards and a loss of customers’ trust.
“Asda’s plummeting market share is entirely down to TDR Capital’s financial mismanagement and Asda is now in a fight for survival.
“Its time for TDR Capital to get serious – over 150,000 jobs are on the line if they get this wrong. TDR must start listening to its workers to arrest this worrying and dramatic decline.”
At the weekend, Stuart Rose, the chair of Asda, said he was “embarrassed” by its performance under his supervision. Lord Rose suggested Mohsin Issa should step back from running the supermarket.
Issa’s presence is seen as unhelpful to the company’s efforts to hire an experienced executive to lead a turnaround in Asda’s fortunes.
Reports earlier this year suggested there had been a rift between the Issa brothers after the breakdown of Mohsin’s marriage, which was said to have “sent shock waves” through the family. However, in March Mohsin Issa denied there had been an estrangement, saying the pair “get on exceptionally well”.
An Asda spokesperson said: “We recognise and accept that there are areas that need improvement and have set out the priorities we need to focus on to address that challenge.”
The group said it was investing an additional £30m in stores this year to improve customer service and product availability and was also spending on IT to enable it to separate its systems from its former majority owner, Walmart.
“Since acquiring Asda in 2021, the shareholder group have invested more than £3.8bn to transform the business into a diversified retail group to position Asda for long-term success.
“Unlike our competitors, Asda is undertaking an extensive period of transformation,” the spokesperson said. “While we have recognised that our recent sales performance is not reflective of where we want to be, Asda remains firmly the third largest supermarket in the country. We delivered total revenue growth, excluding fuel, of 2% in the first half of 2024 and continue to see growth in both our online division and George business.”
TDR declined to comment on the GMB’s criticisms. However, when announcing the deal to buy out Zuber Issa in June, Gary Lindsay and Tom Mitchell, managing partners of TDR Capital, defended their record at Asda, saying they had made “significant progress in transforming” the chain.
They added: “We have added a scale convenience business, grown Asda’s store footprint from 623 to 1,200 stores and food-to-go sites, and launched a hugely successful loyalty app, which now has 6 million active customers, accounting for around half of total sales.”
