Wal-Mart Cries Foul

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In one of the clearest cases of delicious irony in recent memory, megaretailer Wal-Mart (NYSE: WMT) yesterday urged the British government to investigate the growing market dominance of leading U.K. grocer Tesco.

A survey published last week by market research firm Taylor Nelson Sofres reported that in the U.K., Wal-Mart's Asda subsidiary controlled just 16.7% of the nation's grocery market. Wal-Mart has reason to be shocked and appalled at that information. After all, the company paid nearly $11 billion to acquire Asda just six years ago, so it has a lot of money riding on the chain's success. Last year, Wal-Mart's British grocer boasted a 26.6% market share -- meaning that it's lost nearly 10% worth of market share in just 12 months.

Meanwhile, Tesco has roared ahead. The same Taylor Nelson Sofres survey put Tesco's market share at 30.5%. For the record, Tesco, too, seems nervous about the survey's results (albeit for opposite reasons) and argues that the "30.5%" number does not factor in the portion of the market held by upscale rivals such as Marks & Spencer.

Whatever the true number is today, it seems that Asda's market share may take another dive tomorrow. A recent ruling by Britain's Advertising Standards Authority has held that an Asda marketing campaign misleads consumers by asserting that it is "officially Britain's lowest-priced supermarket." While Asda cited survey results from trade industry magazine Grocer in support of its claim, the authority faulted Grocer's survey results for relying on too small a sample in pricing goods. A survey published by Goldman Sachs (NYSE: GS) backs up the authority's finding and argues that Tesco is actually the country's cheapest grocer.

Dueling surveys aside, there's a bigger issue to consider here: corporate hypocrisy. Wal-Mart is, after all, the world's biggest retailer, with all the pricing power and market-dominating potential that such a title implies. The company's annual turnover exceeds most nations' GDPs. In the grocery segment, Merrill Lynch (NYSE: MER) put Wal-Mart's U.S. market share at 15% in 2003, and at least one research report argues that the company is on track to control a 35% share of the U.S. grocery market by 2007. Yet here it is, whining that it's a helpless, hapless victim of big, bad Tesco?

Get a grip, Wal-Mart. You're still the big kid on the block, even if you're having a bad year. You don't need to enlist the government to fight your battles. All you need to do is what you do best: compete.

More Wal-Mart takes for your shopping cart:

• Wal-Mart Bids to Expand in U.K.
• British Tabs Target the Business World
• Carrefour Held Down

Fool contributor Rich Smith does not own shares of any company named above.