Wal-Mart aims to leverage British arm Asda back to health

Wed Feb 8, 2017 10:13am EST
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By James Davey

LONDON (Reuters) - Wal-Mart (WMT.N: Quote) is throwing its weight as the world's largest retailer behind its struggling British arm Asda after admitting it was too slow to respond effectively to the threat posed by the discount supermarkets.

Asda thrived for a decade as Britain's cheapest supermarket after it was bought by Wal-Mart in 1999 and remains the third-biggest in the country.

But German-owned Aldi [ALDIEI.UL] and Lidl [LIDUK.UL] have steadily cut into Asda's market share. The two discounters started opening stores in the UK in 1990 and 1994, respectively, but their big breakthrough came when the economic crisis hit in 2008 and more British shoppers were prepared to give them a go.

Declining sales show signs of tapering off since Wal-Mart veteran Sean Clarke became Asda's president and chief executive last July, with a focus on improving the look and feel of the stores as well as enhancing product lines.

Wal-Mart will provide further firepower by ensuring Asda leverages the parent's purchasing strength in everything from refrigerators to own-brand products and real estate to drive down prices and costs, said Scott Price, chief administrative officer of Walmart International.

"One thing that maybe we would criticize ourselves for is that we didn't start the repositioning of the business sooner, that we didn't focus more on the leverage opportunities so that Asda was able to invest more aggressively in price," Price told Reuters in an interview.

"What Sean is able to do with his global experience at Wal-Mart is to know what levers to pull," he said, in a reference to Clarke's time with Wal-Mart in Japan, Canada and most recently as chief executive in China.

Working more closely with its parent, Asda will be able to market more Wal-Mart brands as its own at a lower price than rivals, Price said.   Continued...

Shoppers leave the Asda superstore in High Wycombe, Britain, February 7, 2017.  Picture taken February 7, 2017. REUTERS/Eddie Keogh