The performance of Asda post its buyout by TDR Capital and the Issa brothers is under scrutiny.
- Judith McKenna, ex-head of Walmart International, expressed concerns over Asda’s direction.
- Asda faces challenges including a declining market share and separation from Walmart’s IT.
- McKenna highlights the need for Asda to complete its systems transformation promptly.
- Despite issues, Asda has contributed valuable technology and insights to Walmart.
Judith McKenna, the former head of Walmart International, has noted with disappointment that Asda is currently not performing as expected following its 2021 acquisition by TDR Capital and the Issa brothers. The grocery chain’s market share has been on the decline over the past year, exacerbated by considerable debt and the complex task of decoupling its IT systems from Walmart’s infrastructure.
Speaking at the FT Live Future of Retail conference, McKenna pointed out that one of the initial advantages of the Issa brothers’ acquisition was their entrepreneurial spirit and potential to innovate within the UK supermarket scene. However, due to various factors, including economic conditions and possible distractions, this potential has not fully materialised, according to McKenna.
A significant issue identified by McKenna is the ongoing transformation of Asda’s IT systems, which has become a substantial drain on resources and has led to issues affecting both staff compensation and customer orders. She expressed a desire for the transformation to be completed soon, acknowledging the difficulties involved in extricating Asda from its former parent company’s systems.
Despite these challenges, McKenna maintains a positive view of Asda’s historic role in enhancing Walmart’s technological capabilities, particularly in grocery e-commerce. She acknowledged that Asda’s contributions have been pivotal in enabling Walmart to become a leader in the grocery home shopping sector in the United States. McKenna stated, “It is way harder to get out of systems, than it is to get into them,” encapsulating the complexity of the integration and separation process.
She emphasised that, despite being considered a financial burden at times, Asda has brought significant value to Walmart in areas beyond mere financials, such as contributing to Walmart’s global strategies. McKenna’s reflections reveal a mixture of concern for Asda’s current struggles and optimism for its future potential under new management.
Asda remains a significant entity with potential for recovery despite current challenges post-acquisition.
