Asda sets out plans for Netto distribution network

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Asda is to absorb one of Netto’s distribution centres into its own network. However, it expects to close a second site.

The retailer has set out its plans for the Netto business following the announcement by the Office of Fair Trading that it was minded to approve Asda’s purchase of the Netto business from Dansk Supermarked.

Asda announced the takeover in May. It is paying £778 million for Netto which operates 193 stores in the UK.

It will convert Netto’s distribution centre at South Elmsall near Wakefield into an ambient cross-dock centre within its own distribution network. It expects to accommodate the majority of the staff at that location within the new centre or, subject to consultation, at other Asda depots close by in Yorkshire.

However, it plans to close Netto’s other depot at Daventry in 2011. It said that, subject to consultation, it expected to be able to accommodate the majority of the staff through regular vacancies at its four other distribution centres at Magna Park, which is just a few miles up the M1.

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These depots already employ some 2,500 people.

Asda will also be introducing additional distribution capacity in the North West to support the converted stores.

The Netto Store Service Centre in South Elmsall will continue to support unconverted Netto stores during much of the 2011 store conversion process. As that conversion progresses, Asda might look to migrate some of the SSC’s functions into Asda.

Under the plan, all Netto stores will be converted to an Asda fascia by the late summer of 2011.

The OFT has told Asda to sell 47 Netto stores. The retailer said this was at the high end of its expectations but it had already begun discussions with prospective buyers and was confident that it could complete the sale of those stores. In the interim, those stores will continue to trade under the Netto name.

All Asda smaller stores to be called “Asda Supermarket”. It expects this division of smaller stores to grow from 26 now to more than 170 in 2011.

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