Asda looks to Walmart to cut costs

Leeds-based Asda said this would allow it to undercut rivals by reducing prices.

The move is part of a drive by Walmart to combine purchasing across international borders, and will see Asda source more of its products, especially non-food items, alongside Walmart.

Walmart has global sales of more than $400bn (247bn), giving the world's largest retailer huge scope to gain discounts when buying.

Walmart aims to increase the proportion of goods it buys directly from manufacturers, rather than third party procurement companies, which it believes could reduce costs by five to 15 per cent across its supply chain within five years.

Asda is already one of the biggest sellers of clothing by volume in the UK, through its George label.

Nearly all of Asda's directly-sourced non-food items are currently bought alongside Walmart, equating to about 40 per cent of the supermarket's non-food sales.

Currently Walmart buys less than 20 per cent of its merchandise directly from manufacturers and purchases are generally made on a country-by-country basis. However, it aims to increase direct sourcing to 80 per cent in the long term.