I’m guessing that the three most common phrases uttered in c-store boardrooms and back offices in recent months have been: “Wages have gone up again?”, “I wish the sun would come out” and “I think the CMA needs to have a look at that”.
After a year of mergers, closures and takeovers, the latest grocery event that the CMA needs to examine is the proposed merger of Asda and Sainsbury’s. In previous years, we would call this a bombshell. But in the context of what has been happening we should probably view – the proposal at least – as inevitable.
Most retailers I know are welcoming consolidation and increased scale in the convenience sector, but I have also had conversations with others who think that the Tesco-Booker merger should not have been allowed to go through. That obviously set a precedent for Nisa and the Co-op, but Asda and Sainsbury’s is a different thing altogether. It’s all retail, and despite the widely-quoted north-south split of the two, there are areas where they have superstores in the same catchment, not to mention the much larger footprints covered by online shopping and home deliveries.
Competition in the grocery market remains intense, with a fast-changing landscape and the rise of new and growing players. But this merger is basically proposing that Asda and Sainsbury’s will no longer compete with each other, with the benefits gained to be funded by suppliers faced with the threat of a business-terminal delisting, and I think that the CMA needs to consider very carefully whether that is in the best interests of shoppers and the market as a whole.
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