Asda is to create almost 7,000 new jobs in 2009, including 3,000 positions specifically targeted at the UK's long-term unemployed through Asda's Local Employment Partnership schemes. The roles will be created in a variety of different areas, with 3,700 created through nine new food outlets, five new Asda Living non-food shops and extensions to 15 stores. Another 1,000 new staff positions will be added to existing stores, with a further 2,000 created through further expansion of its home shopping business, Asda.com. Finally, 120 new roles will be created in Asda pharmacies and optical centers.
The expansion follows a strong period of trading for the retailer. In its last set of results, for its quarter ending September 30, Asda reported like-for-like sales, excluding petrol, up 6.9%. The grocer also stated that it served 1.3 million more shoppers in the week before Christmas than in the same week in 2007, culminating in a record trading day on December 23.
However, although Asda's value proposition has seen it trading particularly successfully, positive results from all of the major grocery retailers have seen expansion plans being unveiled across the board, contrasting with other retail sectors, which are seeing retailers falter, downsize or exit the market. Several factors, including the essential nature of food, higher prices due to inflation and an increasing number of consumers eating at home, have all helped to boost the market. Moreover, food is the one area in which shoppers are likely to continue permitting themselves the occasional, more expensive 'treat'.
Consequently, food and grocery retailers are well-placed to capitalize on the opportunities currently available to the market in terms of the availability of suitable sites and labor, and the reduced competition for consumer spend. In particular, the playing field is now more level for grocers such as Asda, which do not enjoy the huge land banks of Tesco, but will now have access to vacated stores from fallen high street and out-of-town operators.
Among the major players, Sainsbury has announced its intention to create between 3,000 and 4,000 jobs next year, as it expands its floor space by around 3% to 4%, despite the hundreds of head office jobs likely to be lost as a result of re-structuring. Morrisons is to create 5,000 new jobs as part of its target of increasing selling space by one million square feet over three years. Even Tesco, which has seen sales growth slump recently, is planning to add another 200 stores to its massive portfolio, creating up to 10,000 positions.
Moreover, smaller grocers with strong value credentials are also continuing to expand on the back of recent successes. Frozen food specialist Iceland is aiming to capitalize on strong growth in the demand for cheaper, frozen goods, with its purchase of 51 stores from the administrators of collapsed retailer Woolworths likely to create an additional 2,500 jobs. The discounters will also continue to expand this year, continuing the momentum that they enjoyed in 2008. Although the low-cost operations of these retailers will mean them adding fewer staff, Lidl is planning more than 50 stores in 2009, compared with 49 in 2008, and Aldi is likely to at least match the 41 stores it opened last year.
At the premium end of the market, Waitrose is also planning significant expansion, despite inconsistent sales throughout 2008. Indeed, 2,250 jobs will be created in stores, including a substantial proportion across nine new outlets. Moreover, the retailer has also purchased 13 stores from the Co-operative Group following its acquisition of Somerfield, and aims to boost staff numbers at these outlets significantly. On top of these roles, a further 250 positions will be created across the support functions, such as the distribution, warehouse and call center operations.
Therefore, for food and grocery retailers, including Asda, expansion is becoming not only a sensible move, but an essential one in order to avoid losing ground to competitors. The convenience-driven nature of food and grocery shopping makes store penetration a huge factor and well-located stores, established now, will continue to trade strongly, long after the recession is over. Moreover, there are increasing opportunities to capitalize on non-food sales, leveraging value credentials to take advantage of budget-hunting shoppers looking to cut back on the frequency of shopping trips. As the retail market deteriorates further, there will be opportunities for those in the right positions - and the grocers are first in line to capitalize.
