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Sainsbury’s Asda merger “unlikely” to impact consumer choice as supermarkets offer to unload 150 stores

Published:  25 March, 2019

The tie-up between Britain’s second and third largest supermarkets will have no detrimental impact on the diverse and “quick to adapt” supermarket sector, it has been suggested.

In order to satisfy concerns from the Competition and Markets Authority (CMA), Sainsbury’s and Asda have proposed to close 150 stores and cut prices by £1 billion each year by the third year after completing the merger.

In its investigation, the watchdog said the proposed merger could lead to higher prices and lower quality.

However, industry experts say this could be an exaggeration and also act as a deterrent to companies for which mergers offer a vital route to survival.

“As consumers, we now tend to shop in more than one store, whether it’s to remain loyal to major product brands or to shop around for the best prices,” said Julian Fisher, chief executive officer of retail technology firm Jisp.

“The grocery market is performing at its best where product, price and quality is concerned as the market is maintaining competition. This being largely thanks to the German stores, Aldi and Lidl introducing the popularity of a wider selection of products imported from other countries at great prices.”

The proposed merger has been caught in the spotlight on the retail sector this week, which has also illuminated a change in strategy and name for Majestic Wines.

As well as taking the name of its online business, Naked Wines, the high street retailer is also closing bricks and mortar stores.

Focusing on offering on convenience for customers should now be the focus for both Asda, Sainsbury’s and the newly branded Naked Wines, Fisher believes – although Naked shouldn’t neglect its core business.

Keeping a physical presence would be beneficial, he said, “in order to keep the face-to-face customer experience that cannot be provided online with such as wine tasting sessions".