Wal-Mart Retrenches as Tesco Tightens Grip on UK Market

07 July 2005

In a nation where many top brands are of US origin, the planet's largest retailer Wal-Mart Stores, is finding the UK going far from easy.

Having bought its way into Britain's highly competitive supermarket sector in June 1999, moving straight into number three position with its acquisition of the Asda chain, the Wal-Mart unit is currently ranked number two - less through its own achievements than the uncanny ability of the former occupant of that slot, J Sainsbury, to shoot itself in the foot.

But current sales data from TNS Superpanel signals that Sainsbury (market share 15.9%) is poised to push Asda (16.5%) right back into the number three slot in the near future [WAMN: 07-Jun-05].

But while Asda and Sainsbury scrabble for second place, market leader Tesco continues to outpace the rest of the sector with over 30% market share, remorselessly piling on the sales at the expense of its rivals, especially Asda. It is estimated that around two-thirds of the UK population visit a Tesco store at least once a month.

The concept of languishing in number two - let alone number three - position is not part of the Wal-Mart ethos, as was indicated by its recent installation of a new president/ceo, Andy Bond, who this week unveiled his master-plan for overhauling Tesco. It is unlikely to cause the market leader sleepless nights.

Wal-Mart's counter-offensive strategy is hardly impressive, relying on the hoary old formula of axing staff - with around two hundred management positions slated to go, along with 1,200 store positions. It also plans to "bring back proven talent," restructure its HQ lineup to "simplify the business", and invest more in frontline customer service.

The returning "proven talent" prodigals are David Cheesewright, currently chief operating officer for Wal-Mart in Canada, and Andy Clarke, these days an executive with minor UK supermarket chain Iceland. Cheesewright is to become coo/trading director at Asda, while Clarke will resume his old position as retail director.

Also joining the frontline trench as of October 1 is Asda trading director Angela Spindler, who assumes the new role of customer and strategy director.

Meanwhile, back in Bentonville, Arkansas, spokeswoman Beth Keck hailed the latest Asda moves: "I think this shows that Wal-Mart recognizes the competitive challenges and is taking steps to address them," she said.

Data sourced from Wall Street Journal Online; additional content by WARC staff