Outlook: Every day prices spell trouble for Geoff

IT IS hard to know who is left looking sillier - poor old Sir Geoff Mulcahy, deserted at the altar by bride-to-be Asda, or Archie Norman and his trusty steed, Allan Leighton. To be seduced by the lugubrious Sir Geoff is one thing, but to agree terms from Kingfisher that everyone said at the time were far too low, only to find that Wal-Mart, a company they admire and know so well that they copied the formula, was prepared to pay a thumping great 20 per cent more - in cash, what's more - is quite another.

It would, perhaps, be churlish to be unduly critical of the Asda tearaways for this near failure in fiduciary duty. Over the years, they've done sensational things for their company and its shareholders, and in any case, all's well that ends well; investors are getting top dollar after all. Furthermore, like the rest of us, Mr Leighton believed Wal-Mart when it said recently that it wasn't interested in expanding in Britain for the time being. After such a seemingly unambiguous statement, there seemed no need for him to pick up the phone, nor did he.

Even so, the fact that Asda agreed poor terms with Kingfisher when Wal- Mart was prepared to offer so much more rather gives the lie to the claimed logic of the original tie up with Sir Geoff. Both in management and industrial terms, this always seemed a defensive and poorly thought out merger that appeared to offer few obvious synergies and smacked of size for the sake of it.

For Sir Geoff, it looked like little more than a bare-faced attempt to keep the Wal-Marts of this world out, while for Mr Leighton, it offered the added benefit of eventually heading up one of the largest retailers in Europe. It is not clear that such a talented chief executive will find managing one of America's colonial outposts the challenge he will want to be remembered for, filled with admiration for Wal-Mart though he plainly is.

The two sides were making much of their similarities yesterday - why Mr Norman admits to attempting to copy key parts of Wal-Mart's success and Wal-Mart flatteringly describes Asda as in some respects "more Wal- Mart than Wal-Mart itself".

But the truth of the matter is that any company that grows from the back of a pick-up truck in just 35 years to become the US's fourth-largest corporation on market value is bound to have its own distinct methods and entrenched corporate hierarchy. Above all, it is a very, very American company; alien methods and thinking won't be tolerated to any degree, given their potential for polluting such a potently successful formula. Mr Norman admits he will probably be gone as soon as the transition is complete, and the betting must be that Mr Leighton too will be off to pastures new before long.

Sir Geoff was putting a brave face on it all yesterday, and certainly in one respect he is vindicated; if confirmation were needed of his view that retailing is going to globalise and consolidate just like any other industry, this is it. But in other respects this is the worst possible result for Kingfisher. With his head, Sir Geoff will understand Asda's obligation to recommend the higher terms, but with his heart he must feel his old friend Mr Norman has sold him down the river. Not only does he lose his prize, but he ends up with Wal-Mart, the world's most powerful and admired retailer, sitting on his front porch too.

It will take time for Wal-Mart to introduce the full benefits of its systems, logistics, technology and unique corporate culture into the British retailing scene. Nor with planning constraints, high land costs and the still fragmented nature of the European economy will it be possible exactly to replicate American "every day low pricing" in Britain (prices in the US are roughly dollar for pound here).

But make no mistake, this is a company which believes in its mission and rhetoric; its whole corporate purpose is bent towards the principle that lower prices and higher quality lead to greater sales, which lead to greater efficiencies, which lead to lower prices, and so on and so forth in a never ending virtuous circle.

Wal-Mart is eventually going to have a profound impact on European retailing. Those not already preparing for the more competitive environment now promised will struggle to survive.