New rules for Wal-Mart?

The proposed takeover of Asda by US giant Wal-Mart may lead to the Government relaxing its planning constraints to allow hypermarkets to be built in out-of-town locations in the UK. Such a move could change the face of UK retailing – and create a mini-boom for retail designers.

Planners are currently forbidden from building large, out-of-town developments, Bluewater in Kent being the last big scheme to get through. But, according to reports in the Guardian last week, senior executives from the American retailer held talks with Prime Minister Tony Blair in March, though the exact topic of discussion has not been disclosed.

Minister for the Regions, Regeneration and Planning Richard Caborn says the Government has “no intention of changing policy on retail development, which is directed to promoting the viability of town and city centres”.

“We expect new retail development as the first choice to be in town centres. This is consistent with our policy to regenerate town centres and make sure everybody has access to a range of local shops whatever their choice of transport, as part of our key objective of social inclusion,” says the politician.

Government defiance may not be maintained for long, as Asda and Wal-Mart both exert pressure on the Blair administration about planning restrictions. With the huge revenue that Wal-Mart’s involvement in the UK would create for the British economy, the Government may be convinced to relax the constraints.

Focused on low prices and extensive product ranges, Wal-Mart has built up an extensive portfolio of over 3500 stores worldwide, with a sales turnover of £85bn last year.

An Asda spokeswoman adds weight to the pressure on the Government by saying: “We would welcome a softening of the planning restrictions, but it’s far too early to say what will happen in light of the Wal-Mart deal. There are unlikely to be any significant changes at this stage, including a change of store name.”

Though consumers would probably benefit from the likely price cuts resulting from Wal-Mart’s involvement in the UK, environmental groups are up in arms about the possible Government U-turn.

A spokesman for Friends of the Earth says the charity would be “totally opposed to relaxing planning constraints to make Wal-Mart a quick buck” and will campaign against changes if necessary.

“It would fill up more Green Belt, encourage more traffic, damage the viability of town centres and be environmentally undesirable,” the spokesman warns. “It wouldn’t encourage choice either, because the other supermarkets would merge, resulting in even less selection for consumers.”

One retail property specialist concurs. “I think it would be disastrous. We are not a US-type culture,” he says. He highlights the fact that the US is a larger country with a lower density population than the UK, changing considerably the context of the term “local” when referring to planning issues.

Rodney Fitch & Co managing director Rodney Fitch believes there are elements from both US and UK retailing that should be incorporated into possible new Wal-Mart stores.

“Wal-Mart’s entry into the UK brings benefits and challenges, from lower prices to greater involvement by designers,” he says.

Fitch is unsure as to how much involvement designers may have in any new Wal-Mart stores because “there is not great evidence of design at work in Wal-Mart in the US”. But he maintains that working on a larger scale than the present crop of superstores would present new challenges for the design industry.

“Although the principles shouldn’t be all that more difficult, there are disciplines for working on that scale which only a few designers possess. How you hold the store together presents a real challenge,” he says.

Fitch concedes that there are things “Americans do, with or without design, that are better than us”, citing large-scale retailing. But he adds that in the UK “we are better at store graphics and communications and multiple-retailing than in the US”.

Fitch continues: “Asda’s in-store communications programmes are as good as anywhere in the world. Wal-Mart would be wise to learn from them and improve these elements, though we [in the UK] also have a lot of learning to do.”

20/20 business development director Yaron Meshoulam disagrees with Rodney Fitch, claiming that “designers won’t learn anything about detailing from Wal-Mart but will learn about great retail design”.

“There are elements of Wal-Mart that do have good design, with good retail thinking. But there’s not a lot of waste and certainly no indulgence,” he adds.

Although Meshoulam warns retailers about the threats posed by Wal-Mart, he says the US giant will also need to adapt its style for the UK. “The arrival of Wal-Mart poses a big challenge to every retailer in the UK. All sectors, including healthcare and electrical, will be affected, not just supermarket retailers,” he says.

“There will be an enormous learning curve for retailers in terms of having to compete, but there will also be a learning curve for Wal-Mart as competitors won’t just roll over and die.”