The proposed merger between Sainsbury’s and Asda could see up to 300 stores scrapped if plans go ahead according to new research conducted by The Times.

The researched employed techniques typically used by the Competition and Markets Authority, and it showed that there are at least 300 catchment areas where the merger could run into local competition concerns.

A spokesperson from Sainsbury’s spoke to us stating that this is nothing more than “speculation” and that whilst the decision could potentially be made by the CMA, the report is only hypothetical at the moment. She also alluded to the fact this there is no set time to be able to get an answer out to retailers at the moment.

This new development in the mega-merger throws up some interesting regulatory problems. The report, dubbing the closure of stores from the retailers “disposal remedies to ease concerns about high local market share,” could mean that hundreds, if not thousands of jobs are at risk.

The Times report did, however, state: “Under CMA rules, store size is important as it determines which other fascias are counted as competition for the store in question. With few discounters occupying large stores of more than 20,000 sq ft, they may not be considered as suitable purchasers, or indeed may not want any of Asda’s or Sainsbury’s larger store cast-offs.”

Whilst various different locations throughout the UK have been pointed at in the report as potential hotspots for closure, Northern Ireland has not yet appeared on the list. However, with the potential of 300 stores in the UK closing, it would likely that some would have to face termination in NI.

Mike Coupe, chief executive of Sainsbury’s, said that the deal would “create a vibrant company that can compete with the Amazons and the Lidls and Aldis of this world” at a time of immense change in the supermarket industry.

He said that he was “batting for customers”; promising that the merger would lower prices and improves choice, while pledging to cut prices on some “everyday items” by 10 percent.

Whether this research is conclusive of stores closing their doors in the near future is yet to be seen; however, if this is true, the Ainsbury’s merger that many have been waiting for, could prove more problematic than originally thought.

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Both companies seem happy with the proposition, but many are left wondering what economic and regional implications this could have on the industry.

The objective of the proposed merger is to create a larger, more effective and efficient group, dedicated to supporting independent wholesalers. This move isn’t out of the ordinary at time when mergers and acquisitions throughout the UK and Ireland are at a peak. Stiff competition and economic uncertainties continue to encourage consolidation discussions in the market.

HIM released a shopper insight report and it showcased the fact that the new merged wholesaler can focus the efforts and provide a best in class service to customers who probably feel the pinch of competition, as well as changes in the legislation and economic landscape.

Darren Goldney, managing director of Today’s Group has stated, “We believe that this consolidation is narrowing the options for suppliers and potentially threatening the future of independent businesses as multiple chains expand into the wholesale channel.

This merger acts to ensure the sustainable and future success of our members, many of whom have a multi-generation legacy of service to independent businesses, be they convenience stores, catering outlets or many of the other businesses we serve.”

From an internal view, it would appear that everyone on the whole seems quite confident of the proposal. Both Today’s and Landmark wholesale customers are no different. The new merged wholesaler could build on this strong heritage and take this aspect event further for the customers. A proposition that industry practitioners should be keeping an eye on.

Source: HIM Wholesale Study 2018, Convenience Tracking programme (CTP) 2018.

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