Sainsbury and Asda announce plans to merge

Sainsbury and Asda announce plans to merge

The news source relays that Judith McKenna, President and Chief Executive Officer for Walmart International, said that the retailer's moves outside the States are a result of its "thoughtful" portfolio decisions, "perhaps in a way we haven't done before". Sainsbury will in addition pay £2.975 billion to Walmart for control of Asda.

"Given the competitive landscape in United Kingdom grocery retail, profitable growth and expansion opportunities are limited, so reducing resources makes sense - especially when there are other geographies and channels" with more opportunity for growth, said Moody's Lead Retail Analyst Charlie O'Shea. Faced with an increasingly tough retail environment in which discount chains Aldi and Lidl are stealing market share from the traditional supermarkets, the decision to combine with Asda.

"Store closures demanded by the CMA will impact the clothing market share if both Tu and George are forced to shutter stores, therefore convincing shoppers to purchase online rather than switching to other value players will be crucial". However, the large stores may well be viewed as surplus capacity in the industry which no one wants and will subsequently close.

"The Competition and Markets Authority will ensure that there are sales of stores where there is overlap which should help Morrison's and also Aldi and Lidl". Asda has a strong presence in the north of England and Sainsbury's in the south.

Details of the agreement were set out in a stock market announcement two days after Sky News first revealed that the two supermarkets with the second and third biggest share of the sector were in advanced talks over a merger.

The wording of the statement makes it clear that it will aim to reduce prices on some products - its less a commitment to a price war than an attempt to convince that Competition and Markets Authority (CMA) that the deal is good for competition.

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It's a competitor's market right now.

He believes the prospect of Sainsbury's, Asda, and Argos working together, with Walmart (owner of Asda) chipping in too, would be a "pretty powerful combination".

One analysts in food retail said the scale remains the biggest factor in profitability in food retail.

They should really be flagging concerns about job cuts at suppliers.

"Those at the top of Sainsbury's and Asda should explain how they plan to merge these two supply chains fairly, and give reassurance that cost savings won't be achieved simply by milking their small suppliers for all they're worth". Yes, he will be beating up suppliers on price, he admitted. "These proposed changes could confuse customers and be damaging to both the Asda and Sainsbury's brands". Asda is known for its everyday low prices while Sainsbury's is known for the strength of its fresh food offer and the high quality of its food.

Sainsbury's CEO Mike Coupe might've chosen a different song to sing between TV interviews if he wanted to avoid scrutiny. Sainsbury's took over Argos in 2016 and has been integrating the catalogue retailer into its own stores.

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