business news in context, analysis with attitude

  • USA Today this morning features a review of a new book by John Dicker, “The United States of Wal-Mart,” in which he writes that the company has been able to take advantage of the fact that “the ugly truth is that we've become a nation that values little above a bargain…Deep discounts are no longer novelties. They are entitlements."

    It isn’t a rave review; the paper notes that Dicker largely depends on other people’s reporting, and doesn’t reach any groundbreaking conclusions about Wal-Mart’s future. But it does say that the book is good at portraying a Wal-Mart culture that has been successful at communicating to consumers its belief that cheap prices are the most important thing, regardless of how employees are paid, how community infrastructures are affected, and how the company’s outsourcing policies impact the nation’s economy.

  • The Wall Street Journal reports this morning that UK retailing analysts have been describing the recent performance of Wal-Mart’s Asda Group there in terms ranging from “disappointing” to “disastrous,” and are concluding that the company may need to make an acquisition if it is to maintain its position in the market.

    While the company’s new CEO, Andy Bond, has restructured the company’s upper management and pushed for higher levels of customer service, the general sense is that market leader Tesco has a lead that will be almost impossible to lose – in part because it has effectively expanded its convenience store concept, a format not being used by Asda.

    If Asda is to keep up with Tesco, analysts seem to feel that it will need to make a nonfoods acquisition, probably of a company like Matalan or Woolworths.

    Meanwhile – in an example of the kinds of problems faced by Wal-Mart in the UK - reports that the Advertising Standards Authority there is saying that Asda can no longer make the claim that it is the nation’s cheapest supermarket – that its claims are based on too small a sampling of products.

    Analysts expect that Asda will respond to the ruling with a broad range of price cuts, which will be matched or exceeded by other UK chains such as Tesco.

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