June 15, 1999. Copyright 1999. Graphic News. All rights reserved.

Wal-Mart deal could spark supermarket price war


LONDON, June 15, Graphic News: BRITISH supermarkets are preparing for a fierce price war after the worldÕs biggest retailer, U.S.-based Wal-Mart stunned financial markets with a £6.72bn ($10.8bn) agreed offer for supermarket group Asda.
The lean, mean Wal-Mart group is known for operating on tight profit margins Ð to the benefit of consumers but with catastrophic consequences for many of its competitors.
Richard Hyman, analyst at Verdict Research, called Wal-MartÕs move a Ònightmare coming trueÓ for UK retailers. ÒTheyÕre scared of Wal-MartÕs size Ð itÕs of a size thatÕs beyond the experience of everyone elseÓ.
The invasion by the the U.S. giant has unnerved rivals and increased speculation of mergers among other major British stores. There is talk of mergers between Tesco and Marks & Spencer, along with talk of a takeover of Sainsbury by Dutch retailer Royal Ahold. There are also reports that another American retailer, Blackstone and Kroger, may also be ready to swallow Safeway Ð the smallest of the big four UK supermarkets.
The Wal-Mart group, which already has 726 stores in eight other countries, is now expected to use the Asda deal as a bridgehead to expand further into Europe. Wal-Mart already owns 95 stores in Germany.
With its motto ÒWho is most important? The customerÓ, shoppers are greeted whenever they visit the companyÕs 3,600 Wal-Mart stores worldwide, and at checkouts, customers wait as purchases are packed and carried to their cars.
/ENDS