Asda has taken steps to generate supply chain savings and increase its purchasing power by joining a European buying group for the FMCG sector.
The Walmart-owned supermarket has become the fifteenth member of European Marketing Distribution (EMD), a group of national food and non-food retailers in 14 countries across the continent.
EMD pools the collective buying power of 250 supermarket chains to improve their competitiveness. Consumer sales turnover of EMD’s members totals €178bn (£134bn).
The group will be working with Asda to reduce supply chain costs on the supermarket’s own label ranges, including Extra Special.
Asda hopes its membership of EMD, a “radical shake-up” of its approach to buying and the leverage it gets from both being part of Walmart and owning the second biggest UK food supplier, International Procurement & Logistics, will create significant supply chain savings.
“Fundamentally changing how we buy products means we can realise significant savings from our cost base and pass these directly to customers through a rebased pricing model,” said Asda’s president and CEO Andy Clarke.
“Joining forces with the huge EMD network of 250 European supermarkets will give us significant economies of scale. We’ll continue to work with our suppliers to lower costs in our supply chain and return sales to growth in partnership.”
The supermarket, which has 616 stores across the UK, 170,000 employees and an annual turnover of £22.8bn, has also announced a £500m investment in lowering prices, including streamlining operational costs.
According to EMD, Asda will be able to “increase its buying power, generating significant savings from its supply chain which it can reinvest in lowering prices, further increasing product quality”.
EMD’s managing director Philippe Gruyters said: “With the newly acquired partner Asda, EMD affirms its leadership among the purchasing and marketing alliances operating all over Europe.”