Walmart to help Asda mount market share fightback

A top executive at Asda's parent company has pledged greater support to the chain's recovery efforts after admitting it was slow to respond to the challenge posed by discounters in the UK.

Scott Price, chief administrative officer at Walmart International, said the supermarket chain's shoppers would benefit more from Walmart's global buying power to drive down costs and therefore prices at the checkout.

His comments raised the prospect of US-based Walmart shielding Asda, to a certain extent, from the effects of the weaker pound since the EU referendum.

Sterling's slump, against a basket of major currencies including the dollar, has already led to some food price rises because goods from abroad - paid for in sterling - become more expensive.

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Walmart's support would be in addition, Mr Price said, to new chief executive Sean Clarke's previously stated efforts to invest in Asda's offering and improve the store experience.

Since his appointment last July, there have already been signs of a recovery in sales following a period when it lost ground in market share to rival Sainsbury (Amsterdam: SJ6.AS - news) 's.

Asda has reported nine consecutive quarters of underlying sales decline since the middle of 2014 and will report on its progress over Christmas later this month.

Discount chains such as Aldi and Lidl gained popularity following the financial crisis and took customers from all the Big Four - Tesco (Frankfurt: 852647 - news) , Sainsbury's, Asda and Morrisons - as they expanded their UK footprint.

Mr Price told Reuters: "One thing that maybe we would criticise ourselves for is that we didn't start the repositioning of the business sooner, that we didn't focus more on the leverage opportunities so that Asda was able to invest more aggressively in price.

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"What Sean is able to do with his global experience at Walmart is to know what levers to pull.

"He's able to pull private (Walmart) brands and put an Asda brand on it that is equal to the national brand in the UK in terms of quality and sensory, but at a price that no one else can match."

Neil Saunders, managing director of retail at analysts GlobalData, said of the plans: "By putting its almighty weight behind Asda, Walmart can certainly make a difference by reducing and streamlining costs.

"If this can be passed through to shoppers in lower prices, it will help improve Asda's recovery prospects."

He added: "However, this is not a quick win. It is a move that will take time to filter through into public perception.

"It is also something that needs to be done with care. Simply relabelling Walmart's own brand products as Asda's, for example, is not quite as simple as it sounds.

"UK and US tastes are not identical, there are differences in formulation which needs to be accounted for."