Asda tech divorce from Walmart delays cut-over for 55 stores

Supermarket taking 'pragmatic approach' to 'Europe's largest IT transformation program'

Asda has postponed the tech transition of 55 stores to its new systems as US retail giant Walmart continues to support IT at outlets it sold to the new owner in 2021.

Late last year, The Register reported that the UK's third-largest supermarket decided not to go ahead with the system switch at some smaller stores in December as part of its technical divorce from Walmart.

More recently, internal communications seen by The Register show Asda's SVP Forum's Authority to Proceed meeting made a decision to delay the cut-over from Walmart-run systems to Asda's replacement, planned for January 12. The delay hit 29 regular-sized foundation stores (for example, Moorthorpe, Wallsend, Tottenham) and 26 larger main estate stores (including Worcester, Batley, and Middlesbrough).

The Register understands the stores due to migrate on January 12 are set to be moved "imminently."

An Asda spokesperson told us: "We continue to make good progress delivering Project Future – Europe's largest IT transformation program – and have successfully migrated large parts of our business to brand-new systems, including hundreds of our stores, our depots, all head office functions, and our George.com clothing brand. We will continue to take a pragmatic approach when delivering the remainder of the program, balancing the needs of our colleagues, customers, and suppliers."

The Register understands Asda is now taking a "flexible approach" when deciding which stores will be migrated. For example, outside the delayed stores, Asda successfully moved 33 foundation and small format stores to new systems in the week commencing January 5, while the retailer converted 13 stores in the week commencing January 13.

Meanwhile, 64 smaller stores were given a conditional go-ahead for the transition on January 12 providing a "Global Replenishment System" fix was successful. The stores were set to go live in the week commencing January 13.

In February 2021, Walmart sold Asda for £6.8 billion ($8.2 billion) to retail entrepreneurs Mohsin and Zuber Issa and private equity firm TDR Capital. The new owners entered a "transitional services agreement" with Walmart to support Asda's IT systems for an initial period of three years.

Around the same time, Asda embarked on a program called Project Future to set up IT systems independent of Walmart, to provide everything from ERP and HR systems to security and store operations, with an initial budget of £189 million ($229 million).

Asda later extended its support arrangement with Walmart and said it was on track to complete the three-year separation project by the end of 2024. Last summer, about 135 IT staff entered a collective consultation to be transferred to outsourcer TCS, while digital transformation chief Mark Simpson left the business after 28 years of service.

According to Asda, it moved off Walmart's SAP ERP system to a new instance of S/4HANA hosted in the Microsoft Azure cloud in January 2024. In July, an annual report revealed the total cost of Project Future had climbed to £430 million ($520 million) for the period ending December 31, 2023.

In September, the company said it was "prioritizing the conversion" of IT at around 850 retail sites, including smaller supermarkets and Asda Express convenience stores, during the remainder of 2024. It said it would then convert the majority of larger stores from early January 2025 onward following the peak Christmas trading period.

In December, The Register revealed that the senior team decided not to go ahead with the cut-over planned for December 7, 8, and 9, confirming "the decision is a no-go for Arthur stores," the 132 grocery retail sites attached to fuel stations that it bought from the Co-Operative Group in 2022. The decision to delay also affected the "main estate pilot 2" in South Shields, and ten other foundation stores.

At the time, an Asda spokesperson said the decisions to "scale back rollouts in some areas ahead of peak trading" had been "baked into the plan."

Late last week, The Telegraph claimed Asda executives had set a target to finish the handover to Asda-run systems by February. The report said Asda would face a “a penalty charge” if it wanted to continue using Walmart’s technology after that date.

An Asda spokesman told the publication it was making good progress delivering Project Future and had successfully migrated large parts of the business to brand-new systems.

In an earlier interview, Lord Rose, who recently stepped down as Asda chairman, confirmed there would be a cost to over-shooting support deadlines but dismissed the idea it would amount to £15m a week, as some industry sources had suggested.

He said he would prefer to pay the fees and ensure a smooth technology transition. ®

More about

TIP US OFF

Send us news


Other stories you might like