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Asda to increase joint sourcing with Walmart

Asda, the UK's second-largest supermarket chain which was bought by Walmart in 1999, has said that it will increase joint sourcing efforts with its parent company to offset rising commodity costs, particulary in apparel.

The supermarket chain's own label, George, is the primary focus of the new approach, with an initial focus on buying fabric - the purchase of which comprises 40 - 45% of the total cost. It has a target of buying 20% of the fabric it uses jointly with Walmart within the next 18 months, according to the Financial Times.

"We have known that this is a golden opportunity for us… and we've been talking about it," Andrew Moore, managing director of the George clothing business, told the newspaper. "[Rising input costs] have given us the added impetus to move more quickly on it."

According to the FT the apparel tie up is part of a much broader push towards a closer procurement collaboration between Asda and Walmart, with other projects such as fresh produce in the pipeline.

"It is one of our key strategies going forward," said Moore. "There are no new Chinas to go to."

Despite the renewed procurement collaboration with Walmart, George's Moore said that he expected prices to increase by between 5 and 8% this autumn.

Source : Procurement Leaders

31 May 2011
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