Asda / Sainsbury Why the shock?

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The potential merger of ASDA & Sainsbury is no shock

 

The big 5 retail giants in grocery have all suffered as the discounters have moved in and grabbed market share the restructuring of trading formats & retail pricing to meet changing consumer needs has not been their only problem.

 

The search for increased shareholder value has driven Tesco to buy Booker, Sainsbury to buy Argos and Morrison’s to develop a small format franchise, Morrison’s daily and become a partner with Amazon Prime. The Coop buys NISA and provides a wholesale service to Costcutter whilst announcing ambitions to develop a franchise model.

 

With all this happening where did anyone think ASDA was going to go with owner Wal-Mart expecting better returns for its stakeholders?

 

It’s hardly a shock that they would need to look at ways to increase their buying power in the UK with additional volume.

 

It would be no shock to see more mergers at both retail & wholesale level

 

In a rapidly re shaping of the market, small format retailers will be faced with stark choice of by being supplied by a retail competitor or choosing the supply chain which isn’t owned by a national retailer.

 

Either way there is almost certainly going to be massive growth in a far more disciplined Franchise offer from both options in the supply chain. Shared user click & collect points are likely to also be part of these models.

 

For those that choose to build their own brand or remain independent we can expect to see:

  • Specialised stores with a flexible culture
  • Increased Food & drink to go options
  • Rapid change of retail formats to meet local needs
  • “Locality marketing” will become key to keep small format retail alive

Author: kimbarnard

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