Asda Wal-Mart unveils expansion plans

By Anita Awbi

- Last updated on GMT

Related tags: Wal-mart, Supermarket

Britain's number two supermarket chain has announced plans to spend
£400m on a series of store extensions and new openings, in keeping
with parent company Wal-Mart's vision of continuing global
supremacy.

The chain, which was bought by Wal-Mart in 1999, will open 25 new stores this year, creating 7000 jobs. It will also extend some existing supermarkets, adding mezzanine floors to enlarge retail space in key areas.

This news comes ahead of changes in planning regulation that will require supermarkets to gain local authority approval for extensions.

And the firm is set to launch a new discount store format called Asda Essentials, stocking 95 per cent private label goods, in a bid to capitalise on the growing discount market.

Judith McKenna, Asda's chief financial officer, said: "Our 2006 store and investment programme further demonstrates our commitment to flexible formats, mixed use and re-generation schemes, enabling us to create an increasing number of jobs across the UK."

But critics of supermarket retail dominance in the UK have called on the government to act to curb such vast enlargements of retail space.

Friends of the Earth, currently lobbying parliament on this issue, said: "Asda claims that it will create new jobs, but does not say how many other jobs in local communities may be lost as a result of its new superstores opening, or how many may be simply replacing existing retail jobs."

"Trends in retail employment show growth in superstores has led to an overall reduction in the number of retail jobs, and a trend from full- to part-time employment."

In the US Wal-Mart recently unveiled an ambitious expansion strategy for 2006, including major international development, as sales growth slows in its domestic market. Quarterly same-store sales increases dipped from between 7-9 per cent in 2002 to 1-3 per cent last year.

"Expanding into new countries will play a critical role in whether or not Wal-Mart meets its aggressive growth goals,"​ analyst Sandy Skrovan of Retail Forward told CNN.

International operations currently account for only about a fifth of Wal-Mart's sales, but the company says it hopes to increase that proportion to a third over coming years. Globally, the company expects to add over 60 million square feet of retail space in 2006.

Wal-Mart's international division contributes 18 per cent to the total sales of the world's largest retailer, with Asda accounting for nearly half of that.

And in the UK Asda currently holds second position, with a market share of 16.7 per cent, but third place Sainsburys is catching up, sitting on a 16.2 per cent share.

Related topics: Market Trends

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