Does Walmart Own Asda in 2023? (All You Need to Know as an Online Seller)
As an experienced Amazon seller, I‘m often asked about major retail acquisitions and what they mean for the broader ecommerce industry. One question I‘ve gotten a lot recently is whether retail giant Walmart still owns the major British grocery chain Asda.
The short answer is no – Walmart no longer owns Asda, having sold a majority stake in 2021. However, for over 20 years prior, Asda was fully owned and operated by Walmart after being acquired in 1999.
In this article, I‘ll share insights from my experience as an online seller to provide context around Walmart‘s past ownership of Asda, why they sold the brand, and what it all means for broader global retail trends.
Analyzing Walmart‘s Original Acquisition of Asda
When Walmart acquired Asda in 1999 for £6.7 billion, it represented a major strategic play to gain a foothold in the lucrative UK grocery market. Here are some key stats on why Asda appealed to Walmart:
Asda had a nearly 16% share of UK grocery sales at the time of acquisition.
Asda was the UK‘s second largest supermarket chain behind Tesco.
The acquisition gave Walmart a substantial physical store presence with over 200 locations.
For Walmart, owning Asda also provided an opportunity to export its expertise around logistics, supply chain, buying power, and economies of scale into a new market. The UK retail sector operates much differently than the US, which proved challenging for replicating Walmart‘s model.
Some key differences Walmart contended with:
Zoning Laws: More restrictive zoning and land use laws in the UK compared to the US made rapid expansion of large-format Asda stores difficult.
Labor: Differences in labor regulations and union strength altered Walmart‘s typical labor cost-cutting approach.
Geography: The UK‘s higher population density changes real estate economics.
Competition: A highly fragmented grocery market presented challenges versus Walmart‘s US home turf.
UK Grocery Market Share | 1999 | 2009 | 2019 |
---|---|---|---|
Tesco | 26.9% | 31.6% | 27.0% |
Asda | 15.6% | 17.6% | 15.0% |
Sainsbury‘s | 16.8% | 16.0% | 15.6% |
Morrison‘s | 10.8% | 11.5% | 10.4% |
As the table above shows, despite acquiring a top player in Asda, Walmart made limited progress expanding market share over the next 20 years while owning the chain.
Why Walmart Opted to Sell Asda in 2021
In February 2021, Walmart sold a majority stake in Asda to the Issa brothers, founders of EG Group, for £6.8 billion. Based on my experience as a seller, here are my views on why Walmart exited an ownership model they held onto for over 20 years:
Increased Focus on High-Growth Markets
Walmart likely concluded the UK market offered limited growth potential versus redirecting those resources to India, China, and other rapidly growing markets. This included selling Asda‘s gas stations to EG Group to fund growth in India.
Ongoing Brexit Uncertainty
Brexit created uncertainty around UK consumer spending and supply chains. Refocusing on more stable markets like the US reduced this risk exposure for Walmart.
Thin Profit Margins
Fierce competition among UK grocers results in razor thin profit margins. Per Statista, Asda‘s net profit margin fell from 3.7% in 2009 to just 1.66% in 2020. Difficult for Walmart to achieve desired ROI.
Accelerated Ecommerce Demand
The pandemic accelerated consumer migration to online grocery ordering. Asda was slow to build robust omni-channel capabilities under Walmart, disadvantaging them versus nimble digital disruptors.
Desire for Local Focus
Asda struggled to balance Walmart‘s global vision with local UK needs. Local ownership by the Issas allows for greater autonomy in UK-specific assortment/pricing.
What This Means for the Future of Retail
While Walmart‘s ownership of Asda ultimately didn‘t meet long-term expectations, their foray into the UK – along with exits in Germany and South Korea – provides important lessons for retailers considering global expansion, whether via brick-and-mortar or ecommerce channels:
Localization is critical: Imposing a US-centric model rarely succeeds overseas. You need strategic flexibility.
Partnerships can ease entry: Acquiring existing domestic brands, like Asda, reduces some risk vs. solo expansion.
Regulations matter: Navigating zoning, labor laws, etc. is vital for optimizing operations across geographies.
Digital alignment is essential: Having robust omnichannel capabilities provides flexibility to meet local customer needs.
Stay nimble: Reevaluating your ownership stake based on changing retail dynamics shows strategic prudence.
As Amazon sellers know well, expanding into new international markets is exhilarating but requires research, insight, and adaptability. Walmart‘s experience with Asda reinforces this need for customized localization and anticipating differing consumer needs.
Conclusion
In my view as an experienced ecommerce seller, Walmart‘s sale of Asda after 20+ years of ownership was likely the right strategic move. The UK grocery market faced growth headwinds while more promising opportunities existed elsewhere.
Maintaining even a minority stake keeps Walmart financially invested while letting local owners customize Asda‘s future. This balance allows Walmart to focus energy on executing initiatives with greater return potential, while leveraging lessons learned to drive smarter expansion decisions in dynamic global retail markets.