UK/USA: Leighton's departure from Wal-Mart could signal end of Asda brand
Ben Perkins, senior retail analyst at Retail Intelligence, told just-food.com that, while the timing has taken the sector by surprise, Leighton's departure in itself has not. Indeed, "the telling factor was how quickly Wal-Mart had a replacement waiting in the wings," commented Perkins. This successor is Dave Ferguson, who currently heads up Wal-Mart's Canadian operations.
Whether amicable or not, Leighton's departure opens up a window of opportunity for Wal-Mart, which initially pledged to retain the Asda format but earlier this year opened a flagship Wal-Mart superstore near Bristol. In Germany, where Wal-Mart launched its European campaign with the acquisition of 74 Interspar hypermarkets in 1998, a number of stores have already been converted to the Wal-Mart format. It is well known that CEO Lee Scott likes to run a tight ship and oversee international operations from the group's HQ in Bentonville, Arkansas. In view of that, losing an established, respected and powerful regional CEO like Leighton might not be all bad news.
Operations in Germany have taught Wal-Mart some important lessons. Store concepts that work in one market are not necessarily successful in others. In the US, Wal-Mart store staff get together at the start of each day for a group cheer - when this was introduced in Germany employees were found hiding in the bathroom to avoid what they saw as an embarrassment. When Wal-Mart hired bag packers in a bid to offer similar customer service levels as in the US, some shoppers took offence.
The acquisition of Asda seemed to promise an easy alliance, since the latter group had already adopted many of Wal-Mart's strategies. These included the 'everyday low price' philosophy. It seemed to make sense to retain the Asda brand, which had been doing extremely well for several years, overtaking Safeway in 1995 to become the UK's third largest food retailer behind Tesco and Sainsbury. But now growth is slowing, and Scott could be mulling a full-scale conversion to the Wal-Mart format. As Perkins said: "Long-term it was probably always the plan."
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