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Asda is not alone in its struggles

By Donald C McFetridge

Published 20/01/2016

Asda has made an announcement in respect of rationalisation in its UK business
Asda has made an announcement in respect of rationalisation in its UK business

On Friday last week Walmart - bellwether behemoth of American retail - announced it planned to close 269 stores globally.

The shock news came amid the publication of lower-than-anticipated sales figures right across the retail market in the United States.

It therefore came as no surprise that this week Asda (which is owned by Walmart) made an announcement in respect of rationalisation in its UK business.

It is variously estimated that up to 300 jobs are being axed at the company's headquarters in Leeds amid what it describes as "the certainty of permanent structural change".

In November 2015 the company revealed like-for-like sales fell 4.5% in the 13 weeks to September 30, and it is widely anticipated that early next month Asda will post disappointing Christmas trading figures, with some industry insiders suggesting sales could be down as much as 3.5% (or worse) when compared with its quarterly like-for-like trading period in 2015.

Despite this Asda CEO Andy Clarke was in bullish mood when he visited Belfast last week. In fact he pointed out that Asda had great plans for Northern Ireland and planned more stores here.

Not unexpectedly, what he didn't say was whether or not there would be any store closures in the company as a whole, or specifically in Northern Ireland.

A number of well-placed sources in the retail sector are of the opinion that his visit to Belfast was possibly a portent of more bad news to come.

After all, it stands to reason that - with many of the "Big Four" facing radical restructuring in the retail marketplace - there must inevitably be the possibility of store closures on the horizon.

Faced with advancing institutional and structural change, Asda - like its competitors - has to realign itself in response to market conditions and this, in my opinion, could lead to the announcement of the closure of a number of stores (here and in Britain) which haven't lived up to expectations or successfully managed budgetary constraints.

The even worse news is that Asda is not the only chain finding itself in this situation. Its competitors all face similar problems.

Donald C McFetridge is a retail analyst at Ulster University

Belfast Telegraph

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