Asda and Sainsbury’s in £15 billion merger talks

Implications for city as Asda and Sainsbury’s enter £12 bn merger talks

Supermarket giants Asda and Sainsbury’s have started talks about a £12 billion merger to take on Tesco and the German grocers Aldi and Lidl.

Between them the Asda and Sainsbury’s have four stores in Canterbury, employing hundreds and serving thousands on a weekly basis.

It is being reported today that hundreds of stores may close across the UK, accompanied by job losses, if the merger is approved.

And Mark Kleinman, City editor at Sky News, has said that if it goes ahead the Asda brand may disappear and become part of Sainsbury’s.

In Canterbury, the supermarkets sit some 700 yards from one another with Sainsbury’s at Kingsmead and Asda midway down the Sturry Road.

Sainsbury’s at Kingsmead with its iconic masts

A merger would likely see one close, potentially the Sainsbury’s since it is smaller and has a smaller car park.

The Kingsmead location and its closeness to the city centre could also offer developers a lucrative opportunity to redevelop the site, a move that would fit into Canterbury City Council’s aspiration to regenerate the area.

Sainsbury’s two Local stores – at St Dunstan’s and the Old Dover Road – have far better chances of surviving due to their locations and the different consumer experience they offer: smaller shops, more frequent visits.

Nationally, the merger is being seen as a move to combat Tesco which has two stores in Canterbury and which takes 27.6% of the UK grocery market share. But it is also a reaction to growing strength of Lidl, which has a shop opposite Asda on the Sturry Road, and Aldi, which has a shop on the Wincheap Roundabout.

Together, the cut-price German retailers command a 12.6% share of the UK market.

Retail analyst Nick Bubb said: “This has come like a bolt from the blue. Sainsbury’s boss Mike Coupe is looking to defend the chain from competition from Tesco, discount retailers such as Aldi and Lidl, and online retailers such as Amazon and Ocado. The deal is a worry for smaller players such as Waitrose and Morrisons.”

Asda at Sturry Road, Canterbury

Unions are also concerned that staff at Asda and Sainbury’s may find themselves looking for new jobs.

Shopworkers’ union Usdaw has asked for talks with bosses about the merger.

National officer Joanne McGuinness said: “Our priorities will be to protect our members and ensure any deal between the retailers does not impact on their jobs or incomes.”

Meanwhile, Lib Dem leader Vince Cable is urging the Competition and Markets Authority to take a very close look at the merger between the UK’s second and third biggest supermarkets.

Mr Cable, the 2010 to 2015 Coalition business secretary, said: “The grocery market – and the British shopper – already suffers from the mid-market being dominated by just a handful of big players.

“What the merger of the second and third biggest supermarkets threatens is the creation of even more concentrated local monopolies, so it is obvious that there must be an investigation by the Competition and Markets Authority, starting immediately.”

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