Wal-Mart plan a double-edged sword claim

By FW staff

A DOUBLE-EDGED sword is how some in the industry are viewing this weeks planned £6.7 billion takeover of the UKs third largest supermarket, Asda, by ultra-competitive US retailer, Wal-Mart.

Food analysts have already talked of a “revolution in food retailing”, with the US giant having a well-deserved reputation for under-cutting the competition.

The concern is that cheaper products at the retail end can only mean lower prices at the producer end.

“There will not be much pressure on UK food prices in the early stages,” predicts Clive Black of Charterhouse Securities.

“Wal-Mart will focus on toys, clothes and electricals, where it already has established purchasing power.

But in three to four years time the likes of Unilever, Danone and Nestlé will come under real pressure, and this will be passed on to farmers.”

Andrew Fearne of Wye Colleges food industry management group agrees that Wal-Mart will seek to extend Asdas existing culture of value-driven retailing.

“I can see nothing of good for farmers from this,” he said.

But a spokeswoman for Asda said the company would continue to support British producers.

“We will have the same management team in place and so will have the same policy. We are totally behind British agriculture.”

Last December, Asda launched a £400m, three-year plan to buy British, extending its “British only” policy to a wide range of products, backed up with “cost plus” contracts.

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