The recent announcement of Sainsbury’s and Asda’s merger was out of the blue and came as quite a shock. No one expected two of the UK’s biggest supermarkets to merge, but apparently it’s all been formalised and is set to happen. While full details, including an actual date, haven’t been revealed yet, here are some things we do know about the merger no one saw coming.
Right now, Sainsbury’s is the second largest with a 15.8% market share, while Asda is the third largest with a 15.3% share. Their combined share of 31.3% will make them the largest supermarket chain in the UK, surpassing the current leader Tesco and its share of 27.8%. Mike Coupe, the Chief Executive of Sainsbury’s, will lead the combined group once the merge is complete, while Walmart, the American company that has owned Asda since 1999, will retain a 42% share of the newly combined supermarket group.
Effect on stores
According to Coupe, the merger won’t result in the closure of any stores, nor will there be any job losses. What is sure to please consumers is that prices in both supermarkets will likely fall. Roughly 10% of products that consumers use regularly will see a fall in price. It’s expected that both Sainsbury’s and Asda will retain their brand identities and will continue to operate as they do now.
Reasons for the merger
The key reasons why the merge is taking place are because both Sainsbury’s and Asda are facing increasing competition from budget supermarkets Lidl and Aldi, plus Amazon is looking into selling groceries. It’s thought that the two brands won’t be able to grow as much because of Aldi, Lidl and Amazon; merging them will give them a chance to grow and remain the market leader.