Case Study: ASDA-WAL-MART Merger Analysis
In 2002, Asda was awarded the Nestle Social Commitment prize (yes, really), and Asda’s own research unsuprisingly shows that 66% of adults consider the Wal-Mart take-over to be a ‘good thing' for the British consumer. But reality and especially the experiences of U.S. society show something else…
Wal-Mart has no feeling for anyone or anything. Even making money is not the objective anymore. Wal-Mart's sole purpose seems to have become "to protect and preserve ourself". It denies all responsibility for anything. It arrogantly maintains that it is right about all.
The battle against Wal-Mart in U.S. is about maintaining quality community living standards. The true legacy of Wal-Mart isn't lower prices. The true legacy of Wal-Mart is lower living standards for hard working Americans and those overseas. The fact is for every Wal-Mart store that opens, jobs are lost to the community, the tax base shrinks, the number of workers with health benefits declines, and the number of workers eligible for welfare increases.
By merging with Wal-Mart, Asda becomes jointly responsible for crimes caused by Wal-Mart. Consumers shopping at Asda are by extension feeding Wal-Mart capital. Asda often does not reply to questionnaires (eg. from Ethical Consumer or Friends of the Earth). However, there are some known facts…
The Asda website proclaims that Asda stores are Stores of the Community ... playing a positive part in all aspects of local life and proudly boasts of its 'company investment in Britain over the past five years… creating over 25,000 new jobs.'Asda claims to provide job opportunities by opening new stores, but according to a survey by the British Retail Forum an average of 276 jobs is lost for every new supermarket that opens in the UK.
Asda only opened its first town-centre store in 2004,implying that community has never been very high on its list of priorities.
In 2003, Californian suburb Contra Costa County managed to overturn proposals for a new Wal-Mart super center. Part of the evidence that went towards this decision was a study done by the San Diego County Taxpayers Association, 'a nonprofit, nonpartisan organization.' It found that an influx of such stores would cause an annual decline in wages and benefits between $105 million and $221 million, and an increase of $9 million in public health costs. As so few Wal-Mart workers are covered by health insurance, the taxpayer ends up paying for the health of its workers – and stacking shelves and smiling mechanically all day can't be too good for your health. In the words of Ruth Rosen of the San Francisco Chronicle, 'We, the customers, get such low prices and convenient shopping because we, the taxpayers, subsidize Wal-Mart profits by paying for county public health services, food stamps and social services for its retired employees.'
The Times once described Wal-Mart as 'America's largest gun seller' -a direct contribution to community destruction.
In 2000 Asda was exposed in a Panorama documentary as a buyer of produce from a supplier using illegal and exploitative labour. Fenmarc is Asda’s main potato supplier. Due to ‘Just-in-Time’ production methods, labour requirements can fluctuate depending on demand and for that reason many use agency labour – in this case an agency called FP Personnel. When presented with forged documents the suppliers, with deadlines to meet, don’t ask too many questions.The programme investigates the lives of immigrants, many from Eastern Europe, who are unable to enter the country legally, pay gangmasters large amounts of money for forged documents, and are then paid well below the minimum wage for unreliable irregular work and left with almost nothing to live on.This is not an isolated event for Asda or any other supermarket. According to trade union researcher Don Pollard,
'If you removed the entire illegal labour supply there would be, I think, a collapse in the supply chain in the whole food industry.'When challenged on its relations with gangmasters, Asda spokeswoman Christina Watts said:Bear in mind that we're talking here about workers being employed by employment agencies, casual workers being supplied to a supplier of ASDA. These aren't ASDA colleagues. We are three steps down the chain here.However, according to Professor Tim Lang of Thames Valley University,In power terms the supermarkets are by far the greatest accretions of power. So they have proportionally more responsibility.Asda's final comment on the matter was:We can play a part, we are playing a part, with an ethical trading policy that's robust and demanding, but we cannot do the job of the government, the police, the immigration service, all the other people who are involved. We're pulling our weight, we're playing our part but it's complex and other people need to do the same.As the much-publicised tragedy of the Morecombe Bay cockle pickers shows, this is an ongoing problem that supermarkets and others are still failing to address.In May 2004, 175 workers were sacked by Europackaging in Birmingham because they had joined the GPMU trade union. The workers had been forced to work 84-hour weeks on the minimum wage, often with no days off for weeks at a time. When the remaining workers went on strike, they were threatened with sacking too. Some staff remain on the picket line, meanwhile asylum seekers have been brought in to do the work instead. Europackaging supplies several major supermarkets including Asda.Tony Burke, Deputy General Secretary of the GPMU said:The treatment of our members there is utterly appalling. This is exploitation of British citizens just because English in not their first language and some of them do not speak much English at all. Now, if what is being alleged about taking on asylum seekers is true, that's a whole new ball game. It is highly illegal and dangerous for those individuals, and supermarkets ... need to know of these circumstances as soon as possible.
Wal-Mart has been notorious for a long time in the US as a bad employer at home and abroad. Wal-Mart's vendor contracting record is especially troubling given its position as the largest retailer in the world. As a market leader, Wal-Mart wields tremendous influence over its industry. The so-called Wal-Mart human rights screening of contractors, its Code of Conduct and its implementation, do not seem to offer effective protection from human rights abuses. In July 2000, Wal-Mart Canada was caught buying products from the military dictatorship of Burma (Myanmar).Wal-Mart is attracted to sweatshop vendors. Other companies hardly renowned for their ethical policies (Gap, Nike and Reebok among others) have apparently taken steps to improve their behaviour on these issues, while Wal-Mart's efforts have been negligible.Wal-Mart also decided against piloting a third-party independent monitoring program (IMP), using locally based NGOs, at its vendors' facilities in Central America. Religious, human rights, and labour groups agree that IMPs provide the most effective means to ensure that vendor factories avoid labour and human rights abuses.An Oxfam report, Trading Away our Rights: Women working in global supply chains, specifically mentions Asda/Wal-Mart and Tesco as companies which exploit workers in the countries that supply their products.According to Oxfam, Wal-Mart's preferred tactic is to nominate just one supplier from each category of produce, in a mutually exclusive deal. Unbelievable as it may seem, these agreements are often entirely verbal, making it easy for the supermarket to back out at any time it chooses. The supplier is thus under a lot of pressure to continually supply low-cost, high-quality produce (and, of course, all of the same size, shape and colour...) for the season. This informality also means that supermarkets can delay payments, often a problem for a supplier working on a tight budget.A Chilean exporter dealing with Asda and Tesco is quoted as saying:They are interested exclusively in their own business, they do not want me to sell to another supermarket... If I want to, I am told, 'Well, stay with them, then.'.
In recent years, as 'ethical shopping' has become a larger item on many Western consumers' agenda, various initiatives such as codes of conduct have been introduced. However, according to Oxfam 'they are heavily focused on technical, not ethical standards, aiming to ensure healthy and safe food for consumers but not decent and secure jobs for workers.' For example, most European retailers and their suppliers are now signed up to EUREGAP, 'a rigorous technical and environmental code for farmers to follow', covering issues such as pesticide use, residue testing and pest control in packhouses. However, worker welfare only gets one brief mention as a 'minor' requirement to comply with national labour laws.Many UK supermarkets have also adopted the Ethical Trading Initiative, which deals more specifically with labour standards.However, some inspections only cover packhouses and not farms. Supermarkets often claim their supply chains are too complicated to find and inspect all the farms (even though they keep reducing the number of farms they deal with) another intrinsic problem with being a supermarket). Even when inspections do take place, it seems they are often no more than token gestures involving checklists, with no involvement of workers and insufficient attention to the concerns of women and temporary workers. According to a wine grape farmer in South Africa: 'People visit the farm, but it is a waste of time. No goals were set, there was no checking to see whether we were complying with the ETI's requirements.' Another said farm checks were 'mostly just questionnaires.'Wal-Mart has its own 'code of conduct' for its international suppliers. However, it refuses to disclose any factory names and addresses, making any independent monitoring of its practices very difficult. The National Labor Committee in the US did manage to track down a factory producing toys for export to Wal-Mart; none of the workers they spoke to were even aware that the company had a code of conduct.
To monitor its conduct towards factory workers, Wal-Mart uses the accountancy firm PriceWaterhouseCoopers (also used by Disney, Nike and Gap). Many workers and labour rights organisations feel uneasy about having a private firm doing this sort of monitoring rather than a locally-based NGO:A report on Pricewaterhouse’s monitoring of a factory in China making Wal-Mart products claimed that auditors missed serious problems, including the use of dangerous chemicals, management denial of collective bargaining, and violations of overtime laws.
One auditor was said to have noted that he needn’t ask about freedom of association, because 'there is no union in this factory.'Being such a powerful force in the world of retail, Wal-Mart's behaviour is inevitably going to have an effect on that of other companies. According to Charlie Kernaghan of the US National Labor Committee, 'In country after country, factories that produce for Wal-Mart are the worst.' Moreover, Wal-Mart's presence 'is actually lowering standards in China, slashing wages and benefits, imposing long mandatory overtime shifts, and tolerating the arbitrary firing of workers who even dare to discuss factory conditions.' Wal-Mart is the world's largest importer of goods from China.Jim Hightower writing in the Independent Weekly says Even the big boys like Toys R US and Kroger are daunted by the company's brutish power, saying they're compelled to slash wages and search the globe for sweatshop suppliers in order to compete in the downward race to match Wal-Mart's prices...It constantly hammers each supplier about cutting their production costs deeper and deeper in order to get cheaper wholesale prices.
The 'Toys of Misery' report on www.chinalaborwatch.org gives details about the Foreway factory in Dongguan Municipality, China, which produces plastic toys for Wal-Mart, Disney and other multinationals. According to the report, workers are paid below the minimum wage, often paid late, refused some back wages if they quit, and forced to work excessively long hours and during national holidays. Wal-Mart's 'inspections' of the factories involved are described as farcical.According to Bananalink, bananas are the single most valuable item that go through supermarket checkouts, accounting for nearly 1% of all sales. Supermarkets are the only part of the supply chain to consistently make profits out of bananas.Asda Wal-Mart now has an exclusive deal with Del Monte for bananas, and is successfully carrying out its Every Day Low Prices strategy. Del Monte sources over half its bananas from Cameroon, where according to Friends of the Earth, 'wages, labour and environmental conditions are said to be terrible.' The company also has some plantations in north-east Brazil, where conditions are said to be similarly bad.Ralph Gonsalves, Prime Minister of St Vincent and the Grenadines, said in 2003 that he had seen a negative effect on the islands' economy after the takeover of Asda by WalMart:What they want to do is to drive everyone out of the market and and then to raise the prices. The people who supply WalMart are paying people starvation wages in Central America and Latin America in conditions that no civilised country would accept.
According to Bernard Conibert of the Windward Islands Banana Development and Export company:What we have seen is a direct result of what Asda and WalMart are doing in the industry... This isn't just about bananas, this is something that is happening to British farmers and other suppliers. WalMart behaves irresponsibly in the way it drives down prices without regard to the consequences.
Harriet Lamb of the Fairtrade Foundation reiterates the importance of supermarkets' behaviour:We are very concerned about the price war on bananas. It has created a downward spiral that has put huge pressure on the producers. Demand for fair trade is driven by consumers, but it's up to supermarkets to meet that demand.
Relations with suppliers at home
'Our support for British farmers is steadfast' - Asda website.Supermarkets have long been criticised for destroying farming in the UK. Asda has portrayed itself as friendly to farmers, even by organising events such as visits by farmers' groups to stores. This contrasts with the way it is portrayed by farmers in its supply chain. A survey carried out by the National Farmers Union in 2002 revealed that for a basket of food costing £37 in a supermarket, farmers would receive an average of just £11.Supermarkets also consistently fail to support British farmers because in their quest for the lowest possible prices they tend to source products from abroad, where land and labour are cheaper. It should also be noted that farmers often do not want to comment about specific companies they dealwith for fear of retaliation, and for this reason it is often hard to get much information.Along with all the major supermarkets, Asda is now signed up to the supermarkets' Code of Practice, a voluntary code set up in March 2002 to ensure that farmers supplying supermarkets were treated fairly. Aware of 'strong anecdotal evidence' that the Code was not working as it should be, Friends of the Earth in March 2003 conducted a survey of farmers across the UK. The results were not encouraging: only 44% of respondents were aware of the existence of the Code. Of the respondents judged to be 'directly affected' by the Code, 59% had heard of it, but only 14% had actually seen a copy of it and 88% said it had made 'no difference' to their dealings with supermarkets and their intermediaries.Only 21% of respondents had complained to supermarkets or their intermediaries about the treatment they received. Of those who had not, 34% said this was due to 'fear of delisting'. Another said 'they are the boss', and others that there was 'no point'.53% of dairy farmers said they received the same or less than their production costs for milk. One said the price they were given for milk had been reduced because the supermarket had a 'two for one' promotion on.In September 2004 Farmers for Action were considering blockading Asda depots around the country in response to the increasing difference between prices they are paid for milk and the high prices the supermarkets charge for it. David Handley, chair of the group, said:Our profits have been eroded and the MDC [Milk Development Council] report shows where it has gone. We are entitled to some of that.In 2004 Asda has moved to sourcing all its milk from one supplier, Arla.When the major supermarkets were bidding to take over Safeway, the Competition Commission conducted a survey in which they questioned supermarkets and their suppliers about how relations between them were going and what the effects of the Safeway takeover might be. Both large suppliers and small responded by saying that since Wal-Mart's takeover of Asda, relations between supermarkets and their suppliers had generally got worse. It seems that Wal-Mart has been setting a bad example to other retailers and pressuring them to behave as badly as it does in a never-ending race for the lowest prices.Asda's acquisition by Wal-Mart marked a fundamental change in multiple food retailing in the UK. In response its competitors (most notably Tesco) had intensified the price and cost pressures they exerted on their suppliers both large and small.
The report includes comments from farmers, such as:Since the acquision of Asda by Wal-Mart our negotiating power has been severely reduced and this in turn has had a cascading effect on our negotiating power with other supermarkets.The acquisition of Asda by Wal-Mart has accelerated a trend of ever increasing pressure to provide additional services with costs inevitably borne by ourselves. There is less recognition of supplier needs within the Wal-Mart culture and significantly less emphasis on developing long-term trading relationships based on mutual benefit. 47 – 50% of suppliers in the report dealing with Asda, Tesco, Safeway and Sainsbury's say their negotiating position has worsened since the takeover. A significant proportion of suppliers dealing specifically with Asda say that their overall business position had 'worsened a lot' since the takeover.In 1999 – perhaps not coincidentally the year it was bought by Wal-Mart – Asda reduced the number of fresh produce suppliers it dealt with from 250 to 20 'to simplify the supply chain, streamline costs and ultimately provide better value for the consumer.This does not fit in with Asda's alleged policy of trying to use local suppliers.
Fancy a job at our local supermarket...?
At Wal-Mart, we respect the individual rights of our associates and encourage them to express their ideas, comments and concerns. Because we believe in maintaining an environment of open communications, we do not believe there is a need for third-party representation. - Wal-Mart's websiteWith more than a million workers, Wal-Mart was in 2000 the biggest employer in the USA. It therefore has a powerful influence on American society. Through sub-standard wages, poor benefits and a lack of health insurance coverage, the company puts pressure on all aspects of society.Wal-Mart has become famous as a bad employer. The company policy of temporary employment means it does not have to care about the long term consequences of the way in which it treats its employees. Management rules worked out by the company advise keeping an employee at work only if he or she can be fully used - if not the worker is asked to leave. If there is a job which needs more time than specified in a contract then the workers stay after hours without being paid.Many Wal-Mart ‘associates’ also have part time jobs because the Wal-Mart pay is insufficient (according to Bill Quinn, author of How Wal-Mart is destroying America, we don’t know how many because the company doesn’t release employment data). Only 38% of Wal-Mart (U.S.) employees have health insurance provided by the company.Even Wal-Mart’s full time retail wage normally puts the earner below the federal poverty line, especially as full time work is defined by Wal-Mart as 28 hours per week or more.Many Wal-Mart employees are on food stamps or government assistance - which shows how further drives for low prices pass real costs on to people at all stages of the process.Wal-Mart is committed to spreading its anti-union, anti-worker operation to any country where it does business, regardless of national labor laws or international labor standards protecting the right of workers to organise.
- United Food and Commercial Workers (UFCW) President Doug DorityWal-Mart is highly suspicious of labour unions. To avoid formation of unions, Wal-Mart has created separate departments to make co-operation between workers more difficult. It also has a comprehensive management campaign of fear, intimidation, and firing. Moreover, company officials have taken individual workers behind closed doors where teams of managers attempt to force workers to accept Wal-Mart's anti-union position. According to Union Network International Wal-Mart has a 'Labor Team', which is sent into stores to prevent employee elections. According to a company guidebook for supervisors:Wal-Mart is anti unionization. You, as a manager, are expected to support the company's position. ...This may mean walking a tightrope between legitimate campaigning and improper conduct.According to some reports, Wal-Mart will not hire workers who have ever belonged to a union, and fires workers who score too high on a 'union probability index'.Wal-Mart is involved in a variety of legal proceedings at any given time. In its 2003 Annual Report, it states: 'The Company is involved in a number of legal proceedings, including antitrust, consumer, employment, tort, and other litigation', including 'thirty-three putative class action lawsuits, in thirty-one states'.In February 2000 none of 780,000 employees belonged to a union.However, things may be looking up. In August 2004 a Wal-Mart store in Quebec became the only unionised Wal-Mart in North America.Wal-Mart stores in Canada are trying to follow its example.In January 2003 union leaders and human rights activists in the United States warned British people to avoid Wal-Mart. Charles Kernaghan, director of the US National Labour Committee, said:If British people knew more about Wal-Mart, they'd be quite frightened. Wal-Mart is the nastiest company we've dealt with. It has no moral compass. It tours the world looking for workers willing to accept the lowest pay and the least benefits... What impact it will have on Safeway and Asda in the long run is very troubling. In 2001, GMB representatives reported that since the takeover Asda had undermined the union's position by not inviting them to the induction of new recruits and not making membership information widely available to employees. Apparently the situation has slowly been improving, but is still 'not brilliant'. It is said to have been an uphill struggle to get each new CEO to take workers' needs seriously and do anything beyond talking.Rather than paying its employees a decent wage, Asda calls them 'colleagues' and offers them motivational tips involving 'Miles of Smiles', 'Pockets of Pride', and 'Going the Extra Mile'. Joanna Blythman describes the staff area in the Asda store she worked in as 'a little bit like being back at primary school', with wall displays including a history of Wal-Mart and league tables of colleagues' performance at work, with 'public declarations made in an almost Maoist spirit of self-criticism'. All this is inflicted on people who are paid £4.62 an hour initially, rising to £5.06 after 12 weeks (unless they're under 18 – then they get £3.82, rising to £4.18) – at a time when the minimum wage was £4.50 and the Low Pay Unit was recommending a minimum of £5.38.For a really vomit-inducing description of how Asda employees are asked to behave when at work.On February 1, 2001, Kinder, Lydenberg, Domini & Co., removed Wal-Mart from the DSI (Domini 400 Social Index, KLD's proprietary socially screened equity index), primarily because the company had not done enough to ensure that its domestic and international vendors operate factories that met adequate human rights and labour standards.
Racial and gender discrimination
Wal-Mart appears not to object to racial and gender discrimination practice in its stores, and this accounts for a considerable proportion of the many lawsuits brought against the company. A famous racial suit concerned the firing of a white woman who had a black boyfriend. The company is suspected of institutional racism. According to Bill Quinn Wal-Mart never develops its stores in predominantly minority areas.It's also worth remembering that a lot of the most exploited workers at other points along the supermarket supply chain in other parts of the world are women and black. The majority of fruit pickers and packers and factory workers in developing countries are women, often migrants and immigrants, usually on short-term contracts or no contract at all. For more detail on this see the Oxfam report Trading Away our Rights.Check walmartsucks.org for a litany of anonymous employee complaints about working at Wal-Mart. Also a story on the experiences of one woman who did manage to acquire a management position.For a story about a black Asda employee's experiences on hearing a racist joke at work.
As George Monbiot says, Asda is taking parties of schoolchildren on 'Big Eat trails' around its stores not because, as it claims, it is worried that children aren't eating enough vitamins, but because it wants to implant in them the habit of shopping at Asda.The programmes are part of PR campaigns and an opportunity to foster dependency and control, roping new consumers in young. Presumably when these children hit their twenties Asda will start inviting them to its in-store singles nights.The educational value of these programmes is highly questionable. For example the main slogan on Big Eat website calls for eating five times in a day, not the most useful health message. Also The Big Read and The Big Sum programs are disrupting schools' programs removing lessons to Asda stores.Asda has had other Big programmes for kids, e.g. ‘Big Healthy Body’, 'a three-year programme to teach children about looking good, eating well and exercise...The Big Healthy Body scheme includes introducing children to unusual fruit and veg through ‘trails’ at Asda stores and an interactive website.'In 2002 as part of 'Science Year' Asda teamed up with the Department for Education to launch 'The Big Science', in which pupils were invited to visit Asda stores and look at 'some of the science that hides behind everyday items found on a typical shopping list'. The children would then be encouraged to come up with their own ideas for future supermarket products. Tony Denunzio said: 'We hope that children enjoy learning about science in our stores and look forward to hearing their ideas for the supermarket products of tomorrow.’- reiterating and reinforcing the belief that supermarkets are good and a perfectly normal part of life.
Supporting whale slaughter
In 2002, Wal-Mart purchased a 37% stake in Seiyu, Ltd., one of Japan's leading supermarket chains. Seiyu, Ltd. is a major distributor of whale, dolphin and porpoise (cetacean) products. Wal-Mart and Seiyu are intimately connected through corporate governance. Five of Wal-Mart’s key executives sit on the Seiyu Board of Directors, including the President and Executive Vice President of Wal-Mart's International Division.Seiyu Ltd is one of the companies currently under international pressure from groups such as Greenpeace and the Environmental Investigation Agency to stop selling cetacean meat in their stores. The animals are killed barbarically and often illegally. The Japanese government has an alleged 'scientific whaling' policy; however, almost all the carcasses from this so-called research miraculously end up on supermarket shelves.For more detailed info on this see the Corporate Watch Tesco profile, also Greenpeace and EIA websites which have lots of facts around the issue of whaling and some campaign ideas.Supporting War Criminals
See section on 'influence' and 'links with government' for details of Wal-Mart's donations to George Dubya's election campaigns in 2000 and 2004. According to Greg Denier of the United Food and Commercial Workers International Union:
'[Wal-Mart] are so large and have so much money that they can overwhelm the traditional democratic process.'
Asda-Wal-Mart refuses to disclose the suppliers of their own-brand products. In the US it seems some 'Made in U.S.A' labels conceal overseas suppliers. In 1998 an examination showed that only 20% of Wal-Mart goods were American in origin (the rest of the items were found to be from 43 other countries).After the Federal Trade Commission charged Wal-Mart with not identifying the country of origin on clothing items listed on its Internet sales site, Wal-Mart removed the items, apparently preferring not to disclose where the clothing was made.
Environmental issues are of concern to supermarkets now due to consumer pressure, but supermarkets create ever more complex PR strategies to make themselves appear 'green', often without actually changing their policies very much.On its website Asda says:Our aim is to identify, monitor and reduce any direct negative effects we have on our environment through a process of continuous monitoring and improvement in the way we manage our day to day business operations. We also try to influence our colleagues, customers and suppliers as this can also help reduce the effect we have on the environment.It then specifies a few things it will do, such as 'reducing greenhouse gas emissions from our stores and distributions centres' and 'minimising packaging from own-brand products.' This sounds pretty good, but it does not go into much detail about how it plans to achieve these goals. In 2001 Asda decided against an externally verified environmental management system. An Asda spokesperson added that 'getting a high environmental profile' was not one of Asda’s key goals.This rather implies that Asda's environmental policy is a token gesture to make itself look good rather than a genuine effort to improve. If you are a large company on the scale of Asda Wal-Mart, and trying to get even larger, it is hard to be very environmentally friendly.To be fair the 'Colleague Discounted Bicycle Initiative' and the ‘Colleagues at Home’ initiative offering advice on energy efficiency at home, including information on appliances, heating, insulation, lighting and quick tips, appear worthwhile projects, although it is unclear what the employee uptake is like.The US state of Connecticut sued Wal-Mart for allegedly polluting state waters with fertilisers and pesticides (11 Wal-Mart stores had broken state environmental laws by failing to adequately contain polluted stormwater).The company was also selling irradiated beef products in the U.S.All major UK supermarkets now sell petrol, and as with everything else they sell, they are always in competition to sell it cheaper than anyone else. In September 2004 Asda was still managing to sell petrol cheaper than any other UK supermarket, in a continuation of its effort to bring price wars into every sector.A company trying to sell cheap petrol can in no way describe itself as environmentally responsible. Asda is especially culpable since so many of its stores are out of town.
Asda claims to be regenerating areas by building new stores, but in reality it is often doing more harm, either by developing on greenfield sites (as was the case in Cannock, Staffordshire in 2000) or creating traffic problems or taking trade away from town centres (eg in Boston, Lincolnshire, in 2003, and in Hillsborough, Sheffield in the same year). In the Boston case Asda gave the local government money for other 'town centre improvements'.
According to a report in Earth Island Journal in March 2000, Wal-Mart has been 'eating up Puerto Rico's open spaces' by building new stores on land which had previously been agricultural.It is not unusual for supermarkets to offer money to 'good causes' in order to be allowed to develop new stores. In Stevenage in Hertfordshire and Worthing in West Sussex Asda has bought land off local colleges who could only afford new facilities by taking that sort of drastic action. In a promotion document for the scheme Worthing College describes it as 'the only way forward', as the local government was unable to provide funding for the college. And as the new store development is right next to student accommodation, Asda gets a reliable supply of customers and workers.
Exploiting planning loopholes
Followed swiftly by other major supermarkets, Asda is aiming for massive expansion of many of its stores without having to go through the usual planning application process. They do this by putting an extra mezzanine floor in the superstore, effectively doubling the size of the retail area. As there is no visible change from the outside of the building, there is no legal requirement for the company to apply for planning permission, although the development often has a lot of impact on local retail patterns, i.e. putting many smaller retailers out of business. A Guardian article from February 2004 reports that Asda plans to install mezzanines in 40 of its stores. In most cases the extra space is used to expand the store's non-food products, putting it in direct competition with the high street. The same article reports that 13,000 specialist shops closed between 1997 and 2002.Friends of the Earth has conducted a survey of local authorities. 80% of those questioned said they were concerned about the practice and most felt powerless to prevent it. 75% said they would like new legislation to deal with the problem. Colin Peters, the head of development control for Eastleigh council, said [Supermarkets] can be very aggressive. You get lawyers and consultants with complex studies showing it [the alterations] won't have any impact. We then either have to spend thousands of pounds ourselves on experts or struggle to argue with it.Despite pressure from local authorities and campaign groups, the government has so far failed to act on this problem. Nonetheless, Asda appears to be concerned; in May 2004 Tony DeNunzio criticised the UK's 'increasingly restrictive planning regime' and said his stores made a 'tremendous contribution ... to local communities, providing the funds to transform difficult sites and offering a tremendous boost to town and district centres'. However, according to Friends of the Earth, 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 October 2003 Friends of the Earth put forward a Planning Bill aiming to close this loophole. Despite receiving cross-party support, the bill was thrown out.However, the situation is slowly changing: according to FoE:...following a Friends of the Earth campaign, the Government has committed to changing the legislation. Asda seem determined to go ahead before new rules come into force, avoiding the need for local scrutiny.
Local food is the latest supermarket buzzword, co-opted from the green movement. Asda’s website claims 'we have identified a £160m sales opportunity for local products'. This would account for merely 1.6% of actual sales.Mutiple retailers tend to be bad at supplying local food, especially in the organic sector. A survey by the farmers' group Organic Growers and Farmers - in which three quarters of respondents said their profitability was low or borderline and their businesses were unviable - reiterates that low prices are more important to supermarkets than anything else, meaning organic produce is often from abroad. The Soil Association has criticised Asda and Tesco in particular for not doing enough to encourage organic agriculture in the UK, and an article in The Grocer concludes that going organic in this country is 'a big gamble'.A Friends of the Earth report tells a similar story: 'We found that well over half the apples on Asda and Tesco's shelves were imported' – and 16% were from outside the EU. Only 32% of Asda's apples were from the UK, compared with 46% from independent greengrocers. None of the organic varieties of apple were from the UK, and there were no local apples, carrots or potatoes in the stores looked at. Perhaps this shouldn't surprise us, as supermarkets' use of a few large distribution centres and their love of uniformity makes it very difficult to supply anything on a local basis.
Asda also states that 'Our aim is that every one of our stores should sell the products of at least one local supplier.' However, in 2004 Asda ditched instore butcheries in favour of three central meat packing plants which will supply the whole country.
Asda appears not to have a general policy on the reduction of pesticide levels in food. Tests showed that 48% of fruit and vegetables in Asda stores contain pesticides. According to a 1998 MAFF report samples of lettuce found in an Asda store in Dundee were found to contain two and a half times the Codex Alimentarius maximum residue level of inorganic bromides. Samples of pears found in Grimsby were found to contain levels of 11mg per kg of chlormeqat pesticide (the UK maximum level is 3mg/kg). Samples of yams found in Grimsby and Kingstown contained levels of 2.7 mg/kg of carbendazim pesticide (max. level 0.1 mg/kg).A Friends of the Earth briefing describes Asda and Tesco as 'falling behind' other supermarkets in their attempts to reduce the use of pesticides. According to the report: Asda says it has prohibited the use of carbendazim, but it is still turning up in its fruit and veg...[Asda] does not appear to have a general policy of pesticide reduction.According to a 2003 report, pesticide levels found in Asda spinach were unsafe for toddlers.
Asda announced in April 2001 that it had implemented a GM free policy. In May it still held animal products that had been fed on GM food (up to three-quarters of the world’s GM crop is fed to farm animals).It's important to remember that supermarkets' anti GM policies are unlikely to be formulated out of any kind of altruistic tendencies or environmental concerns. GM has become a massive issue for western consumers, to such an extent that it is now unviable for supermarkets to sell GM products.
‘Cheap food’ cheats
We offer Britain's best value weekly shop with prices on average 10% lower than our main competitors- Asda website
Asda is a main player in the drive for cheapness, and just after the merger then Chief Executive, Allan Leighton, claimed that Asda would bring down prices to American levels within 18 months. To understand the possible consequences of this take a look at Wal-Mart.This record level of investment by Wal-Mart in the UK is in line with our strategy of long-term market-share growth and good news for British customers who know that when Wal-Mart comes to town, prices come down and stay down.
Paul Mason, Asda’s chief operating officerSince the merger, Asda has set off a price war in the UK by initiating the aggressive 'price-rollback' programme. In 1999 Asda claimed to have ‘rolled back’ the prices on 4000 products. In 2000 this was raised to 6000 and Wal-Mart said £105.5m had been ‘invested’ in Asda's price reductions during the six months to the end of July 2001. 'Since joining the Wal-Mart family in 1999 our sales growth has risen dramatically - and we have cut our prices by around £0.5 billion in total.'Despite these campaign claims we still can find cheaper food in non-supermarket shops! This is especially true of fruit and veg – most cheap food in supermarkets is in the form of 9p cans of beans and highly processed sliced bread. Most things that are good for you are still expensive.
Lying in court
In any case, Asda’s ‘roll back’ price reductions are not always what they seem. In September 2001, Asda was fined £9000 for misleading customers over a discount promotion. They had done this by making price comparisons with figures over six months old. Prosecutor Miles Bennett argued that sometimes the prices in the roll back promotion never actually got any lower: 'The roll back now even lower price for Asda crisps was £1.15 but the crisps had been available for £1.15 for the last eight months.' As a result of this case, the supermarket claims to have changed its pricing policy.The so-called cheap food that Asda peddles with its misleading advertising has wide consequences: is it is subsidised by the taxpayer; it encourages cheap exploitative labour; intensive agriculture, environmental destruction, and animal and human diseases.
In an effort to head off competitors’ increasing internet sales, Asda has been working on developing the ‘in-store’ experience, and has employed trained actors as ‘greeters’ in some of its stores. It has also run singles’ nights and been host to an in-store marriage.Asda is also piloting digital screens in some of its stores for companies to advertise their products. The screens will be placed at eye level. The first companies to agree to be part of the pilot scheme include Proctor and Gamble and Coca Cola. According to the report in The Grocer:The initiative will be run from Asda’s media centre, set up on March 1 and outsourced to its creative agency Publicis. The media centre is a one-stop shop for all Asda’s media opportunities.In this initiative Asda is following the example of Spar and Tesco.