Wal-Mart bought its way into the United Kingdom by purchasing the retailer/grocer Asda. Now, to further consolidate its market share, Wal-Mart is seeking government approval to purchase Safeway, another major grocery. To win this battle, it must out-bid rivals J Sainsbury and Wm Morrison. Safeway has 485 stores, according to the Financial Times, and when added to Wal-Mart’s current ASDA holdings, would put the Arkansas company at a level to go head to head with Tesco, Britain’s leading grocer. To keep its sales growth figures pumped up, Wal-Mart is counting on strong expansion of its international division. Wal-Mart CEO, Lee Scott, revealed to the Financial Times that expansion in places like England must come from taking over existing stores, rather than trying to find undeveloped land. “It’s difficult to build on greenfield sites,” Scott admitted. “And up to now it’s been difficult to interest people in selling companies to us.” Buying companies is how Wal-Mart got into countries like Germany, and more recently, Japan. So when Safeway put itself up for sale , Wal-Mart was interested. Wal-Mart’s european exploits have not all been profitable. The company is widely considered to still be losing money after taking over two companies in Germany. But the British take-over of Asda has generated 43% of total Wal-Mart international sales. In fact, Wal-Mart is now importing Asda’s clothing line, George, into its US stores. Although the Safeway stores are much smaller than the typical Asda store, Wal-Mart officials told the newspaper that its Neighborhood Market store model in the U.S., which as of the end of 2002 only had 31 units, would be helpful in managing the smaller Safeway stores in Britain. “Safeway makes sense for us,” said one Wal-Mart insider this week. “It’s all about being able to expand in parts of the UK where our model is not yet available.”
Outside of sporadic opposition to Wal-Mart, the Brits have generally seemed to be oblivious to the advent of Wal-Mart in their country, in large measure due to the “soft entry” the company made by acquiring a British company. For more information on Wal-Mart in England, search this database by the country name, and Asda.
