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

Abstract

Purpose - 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 re-consider 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.