Settling for second best? Reflections after the tenth anniversary of Wal-Mart’s entry to the United Kingdom

Abstract

Structured AbstractPurpose -This paper evaluates the comparative progress of Asda in the UK since its surprise takeover by Wal-Mart in 1999. Wal-Mart expected to become the #1 retailer in the UK and many commentators saw massive problems ahead for local retailers. These expectations were not met; this paper investigates why.Design/Methodology/Approach -Asda's progress is considered through a brief discussion of the company's history to 1999, an investigation of the changes Wal-Mart subsequently made to Asda's operations, the comparative impact of these changes and then a consideration of the restrictions on impact deriving from organisational, competitive and environmental factors.Findings -Despite the strong rhetoric on entry, the commercial reality has seen only moderate success for Asda, and a widening gap to the market leader, Tesco. Explanation for this includes competitive strategy and reactions, market restrictions particularly in land-use planning, and unwillingness by Asda (Wal-Mart) to alter their focused store format strategy in line with competitor actions and market directions.Research Limitations/Implications -The analysis is at a macro corporate and national level, drawing mainly on published data. Research implications include the rebalancing of considerations of organisational competence and market environment factors on international success. A focus on political and non-market activities is suggested, though an unwillingness of companies to reconsider strategic directions is also indicted as a key factor.Practical Implications -Implications for national and international strategic decision making at the corporate and governmental levels are identified. Businesses can use the findings to reconsider their positioning and actions. Reflections on hyperbolic reactions to takeovers might also be provoked.Originality/Value -No other paper has considered the market level changes in connection with Asda since its take-over by Wal-Mart and sought explanations for the relative (lack of) performance. The conclusion, that Asda has not been as successful as reported in the literature and the media, is original. American retailers however, it had not opened stores outside its home country. This was in stark contrast to many of the leading European retailers, which had internationalised from an early stage. Wal-Mart's comparative insularity began to change in 1991 however when it started to move beyond the USA.Wal-Mart's internationalisation process can be divided into three phases (Burt and Sparks, 2006;Palmer, 2005). In the first phase from 1991-1994, entry to adjacent markets was undertaken (Canada, Mexico and Puerto Rico). The second phase (1994)(1995)(1996)(1997)(1998) after the formal establishment of Wal-Mart's International Division), was essentially a world markets focus whereby a variety of markets were entered (Hong Kong, Brazil, Argentina, China, Indonesia, Germany and Korea) using various methods and approaches and developing different formats.All seemed to involve putting 'a toe in the water' in...

The UK food retail ‘race for space’ and market saturation: a contemporary review

“…However, Tesco "cheated" in game theory terms by returning to the market and buying a large number of sites at low prices (given the lower competition for sites). It is important to note that at this time, the ability of ASDA to respond in line was hampered by considerable financial pressure, prior to its acquisition by Walmart (Sparks, 2011). In the process, Tesco not only developed conventional superstore sites, but also secured a presence in "smaller catchments, for example small market towns with an extensive rural hinterland, with smaller food-only stores of around 2,000-3,000 sq m" (Guy, 2007, 68).…”

“…However, such overviews of aggregate level store growth themselves disguise substantial differences between retailers (cf. Sparks, 2011), with Tesco, at the time of writing, accounting for 30.1% of the food retail market cf. ASDA Walmart (17.0%); Sainsbury's (16.5%) and Morrisons (11.7%) (Kantar Worldpanel, 2013).…”