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Asda to continue its omnichannel strategy at pace under new ownership

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Asda says it will continue to develop its omnichannel strategy at pace under new ownership, following the news that its parent company Walmart Inc has agreed a £6.8 billion takeover deal. 

Mohsin and Zuber Issa, the founders of Euro Garages (EG Group), have teamed up with TDR Capital to buy Asda, subject to regulatory approval. The Issa brothers, who started out with one garage in Bury, Greater Manchester, and now have 6,000 on three continents will have equal stakes in the business with TDR, while Walmart will retain a stake. The deal means the supermarket is back in British hands after two decades as part of the US-based Walmart group.

Asda has almost doubled its online operations during the Covid-19 pandemic – with online grocery sales doubling during the second quarter of its financial year. The retailer aims to expand its delivery capacity to 1m slots a week by the end of 2021, handled by its own logistics service, operating from 39 sites. It now processes more than 15m click and collect orders a year. That investment is set to accelerate, with £1bn to be put into the business over the next three years. Asda also plans to make its supply chain more resilient, while sourcing more food from UK farmers and supporting small businesses and other domestic suppliers. It says low prices and convenient services will remain important. The retailer is currently the UK’s third-largest grocer, with a 14.5% share of the market, and it is ranked Top50 in RXUK Top500 research.

Mohsin and Zuber Issa said: “We are very proud to be investing in Asda, an iconic British business that we have admired for many years. Asda’s customer-centric philosophy, focus on operational excellence and commitment to the communities in which it operates are the same values that we have built EG Group on. Asda’s performance through the Covid-19 pandemic has demonstrated the fundamental strength and resilience of the business.”

They added: “We are looking forward to helping Asda build a differentiated business that will continue to serve customers brilliantly in communities across the UK.”

Gary Lindsay at private equity firm TDR Capital said: “Asda is a strong and well-managed business with one of the leading brands in UK retail. We are proud to be investing alongside Mohsin and Zuber, who have built EG Group into a global convenience retailer and will now bring that experience to bear at Asda. We look forward to supporting them, and Roger Burnley and the management team at Asda, to build on the business’s inherent strengths and drive long-term sustainable growth.”

TDR Capital has worked with the Issa brothers since 2015, supporting them to expand the EG Group around the world. 

Following the deal, the existing management team will stay in place and the business will continue to be able to source from around the world via Walmart.

Asda chief executive Roger Burnley said this represented “an incredible opportunity to accelerate our existing strategy and develop an even more exciting offer for our customers as well as strengthen our business for our colleagues.” He said: “In a constantly changing retailing environment, our new ownership will further enhance our resilience, whilst creating significant, additional opportunities to drive growth.”

Judith McKenna, president and chief executive of Walmart International, said: “Asda has been a powerhouse of innovation for the rest of the Walmart world, and we look forward to continuing to learn from them in the future. This important combination will continue to keep customers and colleagues at Asda’s heart, which is important to us all.”

The GMB Union has called for reassurances on the future of Asda’a 100,000 workers under the new ownership.

Asda, founded in 1965, sells online and via 580 supermarkets, 18 standalone petrol stations, and 33 Asda Living stores. It will continue to be headquartered in Leeds and currently employs more than 147,000 people who serve more than 18m customers a week. 

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