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Asda And Sainsburys To Merge
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just heard on radio..ASDA and Sainsburys are in talks to merge in a bid to beat the German competition... hmmmmmm......don't like the sound of that myself...
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Asda is grim! Cheap and nasty as opposed to cheap and (mainly) excellent at Aldi and Lidl.
09:28 Sun 29th Apr 2018
Wow, chalk & cheese on offer.
No harm in appealing to a wider part of the market, but I don't see how a merger would help. The issues each have will still need to be solved separately. There may be some savings to be made in purchasing/supply, which could help, but make the stores too similar and one loses the distinctiveness and no longer appeals to the existing customer bases.
(Best thing Sainsbury's can do is replace the Marketing department and devise some better campaigns/adverts. Asda is more or less stuck with it's image but needs to be cheaper I'd guess, to be more successful in the lowest cost sector.)
No harm in appealing to a wider part of the market, but I don't see how a merger would help. The issues each have will still need to be solved separately. There may be some savings to be made in purchasing/supply, which could help, but make the stores too similar and one loses the distinctiveness and no longer appeals to the existing customer bases.
(Best thing Sainsbury's can do is replace the Marketing department and devise some better campaigns/adverts. Asda is more or less stuck with it's image but needs to be cheaper I'd guess, to be more successful in the lowest cost sector.)
it's said that they'll stay as separate entities, but together they'll have a bigger market share than Tesco.
A couple of years ago, Aldi audaciously opened a new branch right across the road from my local Tesco, and I've been drawn in for certain things on an increasingly regular basis, as, it seems, so have many others, as it's always busy. I think Sainsbury's has been struggling for some time and this is a way to fight back - economies of scale, and all that.
A couple of years ago, Aldi audaciously opened a new branch right across the road from my local Tesco, and I've been drawn in for certain things on an increasingly regular basis, as, it seems, so have many others, as it's always busy. I think Sainsbury's has been struggling for some time and this is a way to fight back - economies of scale, and all that.
As has been pointed out on several websites offering analysis of the potential merger (including that of the BBC), the Competition Commission seems well-acquainted with the problems currently facing the food marketing sector and may well approve the merger (possibly with Asda and/or Sainsburys disposing of stores in areas where there's no other competition).
That analysis seems to be largely based upon the Competition Commission's decision to approve Tesco's takeover of Booker, meaning that Tesco now largely controls the supply of groceries (etc) to independent retailers (such as 'corner shops' and other independent 'convenience stores').
As I see it, if Sainsbury's/Asda can reduce their distribution costs they can either
(a) maintain their current prices in their stores (but make bigger profits from them) ; or
(b) more likely, lower their prices to try to get their missing customers back.
Method (a) won't harm the interests of customers. Method (b) is in the interests of customers. So I can't see that customers can lose out through the proposed merger.
That analysis seems to be largely based upon the Competition Commission's decision to approve Tesco's takeover of Booker, meaning that Tesco now largely controls the supply of groceries (etc) to independent retailers (such as 'corner shops' and other independent 'convenience stores').
As I see it, if Sainsbury's/Asda can reduce their distribution costs they can either
(a) maintain their current prices in their stores (but make bigger profits from them) ; or
(b) more likely, lower their prices to try to get their missing customers back.
Method (a) won't harm the interests of customers. Method (b) is in the interests of customers. So I can't see that customers can lose out through the proposed merger.
I spent twenty years of my life writing software analysing the dynamics of the UK grocery industry (that's FMCG for those who like acronyms), and (courtesy of poisoned and recently departed dwarf Sir Martin Sorrell) spent another three years,
if only part-time, after retirement back at work looking at the impact the discount stores were having on the traditional retail giants and the effectiveness of the latters' strategies in response to that challenge.
Most of those strategies were about stealing market share from each other in a shrinking market rather than defending the market from the new Germanic invaders. (Is there a "been there - done that" feel about this?)
I spent twenty years of my life writing software analysing the dynamics of the UK grocery industry (that's FMCG for those who like acronyms), and (courtesy of poisoned and recently departed dwarf Sir Martin Sorrell) spent another three years,
if only part-time, after retirement looking at the impact the discount stores were having on the traditional retail giants and the effectiveness of their strategies in response to that challenge.
The strategies were basically about stealing market share from each other in a shrinking market rather than defending the market from the new Germanic invaders. (Is there a "been there - done that" feel about this?)
So the proposed Asda/JS merger makes some kind of sense if they're uniting against a common enemy. However, they're currently beaten on price, and it's not obvious to me how the merger overcom that that disadvantage.
PS: I do understand that there better ways of spending thirty odd years of your life than working in the market research industry.
if only part-time, after retirement back at work looking at the impact the discount stores were having on the traditional retail giants and the effectiveness of the latters' strategies in response to that challenge.
Most of those strategies were about stealing market share from each other in a shrinking market rather than defending the market from the new Germanic invaders. (Is there a "been there - done that" feel about this?)
I spent twenty years of my life writing software analysing the dynamics of the UK grocery industry (that's FMCG for those who like acronyms), and (courtesy of poisoned and recently departed dwarf Sir Martin Sorrell) spent another three years,
if only part-time, after retirement looking at the impact the discount stores were having on the traditional retail giants and the effectiveness of their strategies in response to that challenge.
The strategies were basically about stealing market share from each other in a shrinking market rather than defending the market from the new Germanic invaders. (Is there a "been there - done that" feel about this?)
So the proposed Asda/JS merger makes some kind of sense if they're uniting against a common enemy. However, they're currently beaten on price, and it's not obvious to me how the merger overcom that that disadvantage.
PS: I do understand that there better ways of spending thirty odd years of your life than working in the market research industry.
Really, Minty. Predicted back in December
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