Wal­mart ad­mits de­feat in UK but eyes big­ger prize

The sale of Asda is just the lat­est stage in a rad­i­cal shake-up of the Amer­i­can re­tail gi­ant in its bid to take on Ama­zon, re­ports David Mill­ward

The Sunday Telegraph - Money & Business - - Business -

Changes have been com­ing thick and fast at Wal­mart, the Amer­i­can re­tail gi­ant that started life when Sam Wal­ton opened a five and dime store in Ben­tonville, Arkansas, in 1950.

The past few months have seen the com­pany snap up high-end on­line busi­nesses as it aims to take on up­start ri­val Ama­zon in the US. Now Wal­mart is over­haul­ing its overseas op­er­a­tions as it tries to pick win­ners in the in­ter­na­tional mar­ket. Part of this strat­egy has seen Wal­mart sell off Asda, a com­pany it has owned for 20 years.

The com­pany’s first in­ter­na­tional foray dates back to 1991 when it opened a store in Mex­ico City and, at the last count, the cor­po­rate be­he­moth had a pres­ence in 27 coun­tries.

How­ever, the ap­point­ment of Ju­dith Mckenna to over­see its in­ter­na­tional op­er­a­tions has paved the way for a rad­i­cal change of di­rec­tion and it is this that has un­der­pinned the sale of Asda to Sains­bury’s. The deal, which will give Wal­mart £3bn in cash and a 41pc stake in the com­bined busi­ness, sur­prised some in the US.

“When I first saw the head­lines over the week­end I thought Wal­mart was buy­ing Sains­bury’s,” says Neil Stern, of re­tail con­sul­tants Mcmil­lan­doolit­tle.

“Then I reread the head­lines and re­alised Wal­mart was sell­ing Asda, which was the big­gest ac­qui­si­tion it ever made.

“I think, look­ing at it from the point of the global chess­board, the UK mar­ket was very com­pet­i­tive. It was

‘It was im­pos­si­ble to grow Asda. It had set­tled to be­ing a very un­happy num­ber three in that mar­ket­place’

im­pos­si­ble to grow Asda. It had set­tled to be­ing a very un­happy num­ber three in that mar­ket­place.”

Quite sim­ply, Wal­mart be­lieves that the money it will re­ceive for Asda can

Wal­mart is look­ing to in­crease its foot­print in In­dia, where it is bat­tling Ama­zon, led by founder Jeff Be­zos, left, for a ma­jor­ity stake in the coun­try’s lead­ing web re­tailer Flip­kart

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