Shoppers join world of Wal-Mart

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The Independent Online
THE WAL-MART invasion of Britain is a reality today after the American retail giant formally took control of Asda, following the launch of its pounds 6.7bn takeover bid in June.

A short stock-exchange announcement stated that Wal-Mart now controlled 78 per cent of Asda shares. That means shoppers who visit their local Asda supermarket will effectively be seeing the United Kingdom face of Wal-Mart, the most powerful retailer in the world with a fearsome reputation for low prices.

So what difference will shoppers notice? Asda was yesterday trying to play down expectations of immediate changes. "It will be a case of evolution, not revolution," said a company spokesman at Asda House in Leeds, West Yorkshire. The Asda name will remain, the company says, and it will be business as usual.

But retail experts disagree. They say the Wal-Mart takeover of Asda will be seen in retrospect as the day the UK retail sector entered a new era. "There is no doubt that Wal-Mart is going to cut prices. That is what they are all about," one City analyst said. "The question is where they will concentrate their efforts first and by how much prices will fall."

The announcement of Wal-Mart's takeover of Asda has already sent shock waves through the British high street. Shares in supermarkets such as Tesco and Sainsbury have plunged on fears that Wal-Mart will use its legendary buying power to cut grocery prices.

Shares in other store groups, like Boots and Kingfisher, which owns the Superdrug chain, have also been under pressure as speculation grows that Asda will mount a vicious price campaign on health and beauty ranges.

Tony MacNeary, European consumer goods analyst at SPP Investment Management, said: "Health and beauty may be the first target. Wal-Mart is a major buyer with global branded goods companies like Procter & Gamble and that could lead to lower prices at Asda."

Mr MacNeary says Wal-Mart is likely to target growth categories such as hair-care products and ready-made meals. Other sectors that could see prices tumbling are small domestic appliances and compact discs.

Asda has already started a huge price campaign called roll-back, under which it has pledged to cut the cost of 4,000 key items by the end of the year. It has also cut the cost of what it calls "wow" lines - products, such as Dyson vacuum cleaners, that grab headlines. It is thought that Asda is now planning to cut the cost of some small domestic appliances like microwaves which it can source cheaply from the United States.

The key to the price campaign is Wal-Mart's huge power with suppliers. Wal-Mart is the largest retailer in the world and has sales of pounds 85bn a year from 3,600 stores.

Other changes that consumers may notice are more US-style promotional techniques. Asda has already captured headlines with special events such as singles nights and "hunk of the month" (where female shoppers are accompanied around the supermarket by a "hunky" male.) It is planning a host of others, starting with free tea and cakes for wives and girlfriends abandoned by their partners due to the start of the football season.

Things will change behind the scenes at Asda, too. The head office now features two clocks, one showing London time, the other showing the time in Bentonville, Arkansas, where Wal-Mart's head office is based. There will be more staff-motivation schemes, such as the current Asda competition where the top-performing worker is given the use of a Jaguar car for a week.

But some companies say that the threat of Wal-Mart's UK debut has been overstated. Boots says that Wal-Mart will not be able to slash prices across the board as it still has to make a return on its pounds 6.7bn investment.

Coming Soon to The High St

Staff songs aimed at raising morale. Wal-Mart workers, or associates, as the company calls them, chant slogans such as, "Who's number one? The customer."

In-store entertainment. Wal-Mart holds cookie-stacking competitions, hires clowns to paint children's faces and flies in cheerleaders to perform acrobatics in the car parks. And "greeters" are stationed outside the shops.

Harder work for managers. Wal-Mart holds meetings on Saturday mornings for store managers. And drudge work for managers. Even senior staff empty their own rubbish bins to save money.

A "real" AGM for staff. A parallel shareholder meeting for employees is held, with awards given to top workers and long-serving "associates".

"Wall of eyes" banks of televisions in the shops. Wal-Mart has contracted music stars such as the Bee Gees and Garth Brooks to do concerts for the group in the US. These are screened in the stores.

New product displays. Having studied shopping patterns, nappies, for example, are put next to cans of beer for fathers doing the shopping.

A membership card. Wal-Mart has launched a new concept, Sam's Club. Customers have to be members to shop there.