Asda Decided On A 'no Go' For 'mass Rollout' Of Store IT Conversion

Exclusive Asda decided not to go ahead with planned cut-over dates to introduce new systems at some smaller stores earlier this month as part of its technical divorce from Walmart, the previous owner of the UK's third-largest supermarket.

The move, initially scheduled for December 7, 8, and 9, was slated for the roll-out of mini-marts and garage forecourt stores, as well as a handful of larger stores - as the retailer manages the combined pressure of finishing its three-year project to separate its technology from Walmart, which cost Asda £430 million ($520 million) up to the end of 2023, and the surge of shopping during the Christmas season.

Internal communications seen by The Register state that following "authority to proceed" meetings, the "SVP Forum" had decided not to go ahead with a series of planned transition dates for new systems.

A spokesperson told The Register the planned conversion of these smaller sites is "now underway" this week.

In February 2021, Walmart sold Asda for £6.8 billion ($8.2 billion) to retail entrepreneurs Mohsin Issa 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.

At 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. In the 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 a spokesperson, Asda 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 recent internal communications seen by The Register, the retailer said plans to roll out "future operational" were updated following an "authority to proceed" meeting. The senior team decided not to proceed with the cutover 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-Op in 2022.

The "no-go" decision also included the Express stores "mass rollout," which Asda had said in September it would "prioritize".

In terms of larger stores, the "no-go" decision also included the "main estate pilot 2" in South Shields, a superstore which includes a café, a pharmacist and an optician. At the same time, 10 other foundation stores would also miss the cutover, it was decided. The team said it would continue to work on the "critical fixes" identified in the previous three pilot stores.

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

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"Instead, we are focusing on ensuring that any outstanding fixes are complete to ensure that we are not placing any additional pressure on our store teams when we transition to the new systems, and that when we move to larger scale rollout in the new year we are well positioned having had longer to work with the existing pilot stores and those sites which have already completed the transition," a spokesperson told us.

An insider claimed the smaller stores getting the recent "no-go" decision were the same stores Asda was "prioritizing" before Christmas in its September statement.

The spokesperson refused to say whether Asda planned to complete the conversion of around 850 smaller store sites in the remainder of 2024.

Stores which have not been converted to the new Asda systems remain supported by Walmart, but Asda has declined to say for how long. The Asda spokesperson said the details of the agreement with Walmart remain confidential.

The spokesperson added: "The conversion of those smaller sites remains the priority ahead of our larger stores for the remainder of this year. Elements will move around, and those are decisions we're making to minimize disruption to our customers and colleagues during our peak trading season.

"The 'mass rollout' was not all 850 sites," he added. "It was a small fraction of sites that would have been first to go as part of the 'mass rollout'. The Express and Arthur sites that were a part of that 'no go' decision were moved to this week and the conversion of these sites is now underway." ®