AlixPartners comments on the proposed merger of Sainsbury’s and Asda

Commenting on the proposed merger of Sainsbury’s and Asda, retail expert Sanjay Bailur, a managing director at AlixPartners said,

 “Whilst both Sainsbury’s and Asda are in a relatively strong position, this proposed merger is indicative of a highly competitive environment affecting the UK high street, along with changing customer requirements.   Customers are looking for super-convenience shopping, which means that they want a network of well-stocked local stores, as well as a better online experience. The promise to lower prices on key products by 10% will drive shock waves across the sector. While consumers may benefit, it will spark even more intense price competition across multiple sectors including grocery, convenience and general merchandise. The massive increase in sourcing scale will result in even more pressures on food producers and manufacturers who will need to find new ways of staying viable.

“The combined business will need to work hard to reap the rewards of a 2,800 store footprint across the country. We can expect a review of the supply chain and investment in e-commerce and the management of the combined business will need to monitor costs closely if it is to challenge the dominance of Tesco.”