UK grocery operator Asda has offered to sell some 47 Netto outlets to satisfy local competition concerns raised by its acquisition of the discount retailer.
The Office of Fair Trading (OFT) said today (23 September) that the acquisition would not give rise to competition concerns on a national level because Netto’s market share in the UK amounts to less than 1%.
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However, the OFT was concerned that competition could be substantially reduced in around a quarter of the local areas where there are overlapping stores.
Asda said the number of stores it is being required to sell is “at the high end of its expectations”, but added it is confident it can meet these obligations and expects to complete the conversion of the Netto stores by late summer 2011.
Asda has already begun discussions with prospective buyers and is confident it can complete the sale of those stores. In the interim, the company said, these stores will continue to trade under the Netto name, “with existing colleagues whose roles will be fully protected in the interim”.
The Wal-Mart-owned retailer also announced that the smaller stores will be rebranded as “Asda Supermarket” and will create around 1,000 jobs across these stores, doubling the number of staff employed in the converted Netto outlets.
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By GlobalDataAdditionally, it said that in stores converted from a Netto to an Asda Supermarket, customers can expect to see some “significant changes”, with the range increasing from around 1,800 SKUs to around 10,000, with up to 12,000 in larger stores.
It said quality in these stores will improve, with stores offering a full range of Asda and branded food items and service will be better, providing longer hours, more staff and its in-store collect service, which will provide its non-food offer.
Meanwhile, Asda plans to close Netto’s distribution at Daventry in 2011, but expects to accommodate the majority of staff through regular vacancies at its four other distribution centres at Magna Park, Lutterworth.
Asda will also convert Netto’s South Elmsall distribution centre into an ambient cross-dock centre within the Asda distribution network, and expects to accommodate the majority of staff at that location or at other nearby Yorkshire depots.
Asda CFO Judith McKenna said: “We’ve already learned so much from Netto colleagues and I appreciate their hard work and commitment. I’m looking forward to continuing to work together to ensure we make the transition to Asda a success and putting into practice what we’ve learned. I continue to be excited at what we can achieve together.”
