If approved by UK authorities, Asda, Wal-Mart’s British arm will be acquiring almost 200 UK stores of the Danish Netto chain for an alleged amount in excess of 1 billion US$. Acquiring smaller stores seems like a good move for Wal-Mart in Europe. First, shopping habits in many regions seem to change in a way that (an aging population of) shoppers start to develop a preference for more frequent shopping of smaller quantities in convenient locations. Second, zoning regulations prevent retailers from opening new locations. However, the usual caveats apply: first, Wal-Mart hasn’t done too well in a number of international markets, including European ones (just think of the disaster in Germany). Most recently Asda’s sales dropped inthe UK and it has been loosing market share to its competitors. Second, cultural differences. In addition to differences between national cultures that Wal-Mart sometimes has troubles with, there’s also the fact that Wal-Mart’s pervasive business model isn’t something that travels easily into other contexts. Looks like there’s some homework to do before the post-acquisition integration pains start.
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