More than 800 senior Asda shopfloor staff face pay cut or redundancy.

More than 800 senior Asda shopfloor workers are facing a pay cut or redundancy in the new year after the supermarket chain embarked on another cost-cutting exercise.

Store staff have been briefed this week on a proposal that could mean 842 section leaders being removed from its store management teams. Thousands of other workers will also be affected by a wider move to cut the number of hours spent on stacking and tidying shelves at 600 supermarkets.

In a document given to staff, and seen by the Guardian, the retailer said it needed to cut costs so it could “close the price gap” with rivals Aldi and Lidl.

It said: “We need to continuously review our operating model. … being the cheapest of the big four is no longer a viable business model. We need to be able to look at ways to reduce our operating costs in order to close the price gap.”

The document reveals that about half of Asda’s 153 smallest supermarkets are loss-making. It says the US-owned grocer needs to find ways of working which are “fit for the future and ensure the longevity of the format”.

A consultation process has now begun. If the plan is pushed through in 2018 the section leaders, who work in both the fresh and packaged food aisles, will lose the higher hourly pay rate associated with the job and “management contribution” hours.

The document then explains: “We would explore redeployment opportunities, and only as a last resort, we would look at the possibility of redundancy with affected colleagues.”

The rise of Aldi and Lidl has forced the mainstream chains to restructure their large store networks. Tesco and Sainsbury’s have also embarked on significant cost-cutting programmes this year. The German chains Aldi and Lidl are continuing to grow rapidly, with Aldi overtaking both the Co-op and Waitrose to become the UK’s fifth largest supermarket chain. Lidl passed Waitrose in August to become the seventh largest.

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In October, Asda, whose US parent Walmart is the world’s largest company by sales, announced that its chief executive, Sean Clarke, would be replaced by his deputy, Roger Burnley, in January. Clarke, a Walmart veteran of 21 years, was parachuted into the role last summer to lead a turnaround of Asda.

The shopfloor shake-up is the latest in a series of staffing changes pushed through since Clarke took charge. In August, Asda cut hundreds of jobs in 18 underperforming stores and asked staff in another 59 to work more flexibly. The following month nearly 300 jobs went at its Leeds head office where another round of redundancies took place in its human resources department this week.

One Asda store worker said colleagues were upset and stressed about the timing of the announcement and were now fearful of overspending this Christmas.

In a statement Asda said: “These proposed changes are about making sure we’re doing the best job for our customers in the most efficient way possible. Whilst these are only proposals, we know talking about change is unsettling which is why we’re working with our colleagues to get their views before any final decisions are made early next year.”

The document also sets out plans to make big cuts to each store’s budget for hours spent refilling and tidying shelves. The new Asda mantra for employees stacking shelves: “Can you see it and reach it? Yes? Leave it. No? Shopkeep it.” This reflects a focus on filling gaps on shelves rather that checking every product is in stock.

Bryan Roberts, retail analyst at TCC Global, said: “A lot of retailers have tried to remove section leaders but quality, particularly in produce, can suffer. You run the risk that what you save in headcount you lose in credibility. But being in stock is more important to shoppers than stores looking pretty - if it looks bombed out that’s different, they probably expect more finesse from the big four [than a discounter].”

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