Argos and Homebase on shopping list as Asda plans Tesco chase

SUPERMARKET giant Asda could snap up a major retail chain as it strives to close the gap on its bigger rival Tesco, it was reported yesterday.

Asda, which is owned by US food giant Wal-Mart, is said to be eyeing up Argos and Homebase owner Home Retail in an attempt to snatch a greater share of the general merchandise market.

According to a Sunday newspaper, the firm has considered a number of other firms based both on the high street and in out-of-town shopping parks.

The supermarket chain is also understood to have weighed up budget clothing chain New Look.

Asda, which is believed to have been given the green light for the move by its US parent, would dramatically increase its size under the plans and is therefore likely to attract regulatory attention.

The firm said it would not comment on market speculation yesterday. According to the report, a source said Asda was poised for a “major acquisition”.

“Wal-Mart has realised it’s the only way they can grow and compete with Tesco on the same footing in the UK,” the source said.

Recent industry figures from Kantar Worldpanel showed Asda was the only one of the “big four” to see a decline in its share of the UK grocery market in the 12 weeks to 21 March. The group slipped from 17.3 per cent to 17.1 per cent in the period, partly a result of strong comparatives a year earlier, when its sales were growing at more than 8 per cent.

Meanwhile, Tesco moved higher in the same period up from a share of 30.1 to 30.3 per cent.

The grocery sector as a whole has faced the challenge of slowing growth in till-roll takings this year – with the figures suggesting the rate had slumped to its lowest level since the summer of 2007 amid falls in food price inflation.