Protest forces Asda Christmas discount U-turn

The chief executive of one of Britain's biggest supermarket chains has been forced to reinstate a Christmas discount for his 140,000 employees after a highly unusual rebellion.

Some employees at the US-owned Asda group were so angry about the decision to withdraw the discount they contacted bitter rivals Tesco to ask if they would offer the same price cuts.

It is understood that Paul Kenny, the acting general secretary of the GMB union, also wrote to Sir Terry Leahy, the chief executive of Tesco, urging him to make the gesture.

Asda had withdrawn a 20 per cent discount on beer, wine, spirits, toys, CDs and DVDs but not on other goods which attract less spending at Christmas. Asda employees working at the group's 285 stores were told that on the "big ticket" items they would receive only their normal 10 per cent discounts.

The news comes amid an investigation by Asda into why tens of thousands of its employees refuse to do their weekly shopping at the group's stores. The company admits that about one in five of it employees - nearly 30,000 workers - fall into the category but some internal sources contend that proportion is twice as high.

The union has claimed that morale is rock bottom at Asda, which was named "employer of the year" in the 2005 National Business Awards for Scotland.

Late last week Andy Bond, Asda's chief executive, sent out a note to staff, rescinding his earlier orders and offering a "great shopping opportunity" to his workforce. "Over the past few weeks we have been holding listening groups and our colleagues have made it clear that the changes to 'special discount day' have been disappointing," the note said.

"But as you know we are famous for our culture which is built on listening and acting on feedback from our colleagues. That's why in response we have decided to extend the product areas included in this event to make it a great shopping opportunity for all our colleagues... I am sure you will agree that this is great news for our colleagues, let's make it a fantastic event!"

Giovanna Holt, an official at the GMB union, welcomed the rethink, but said that management had still not reinstated the discount on DVDs and CDs.

"If only they had listened to the union weeks ago they would have avoided all this hardship and bad publicity. They have judged this badly. They haven't listed to colleagues, they've shifted position because of the uproar they created which resulted in colleagues saying they were going go and shop at Tesco."

But David Smith, "people director" at the company, said: "Nobody does more to reward the hard work of its colleagues than Asda. It's what makes us special and that's not only at Christmas."Last year the company saved its workers "millions of pounds", this year the savings would be even bigger. "If that's not a Christmas cracker, I don't know what is," Mr Smith said.

Union officials say tensions have increased since Asda was taken over by the US group Wal-Mart. The decision to withdraw the Christmas discount was part of management's attempt to cut costs so it could compete with Tesco, union officials said.