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first_imgTim RoacheTrade union GMB For Asda workers, this is the right decision after the CMA’s provisional findings. Swathes of stores and depots would have to have been sold off, with jobs put at risk and no real benefit for customers or communities. The workforce has been through months of uncertainty, worrying about what’s going to happen and wondering if their stores or depots would be sold from under them. It’s time for Asda to move on, and to give some stability and security to the staff who work day in, day out to make the company profitable. Reaction: Sainsbury’s-Asda off, UK’s retail industry respondsPosted By: Alex Clereon: April 25, 2019In: Beverage, Blog, Business, Financial, Industries, Logistics, Mergers & Acquisitions, RetailPrintEmail The UK’s retail industry has been responding to the news this morning that Sainsbury’s proposed merger with Walmart-owned Asda – a deal that would have created the UK’s largest grocery retailer by share, and had been more than a year in development – has been called off amid anti-trust concerns.The Competition and Markets Authority (CMA) said that a combined Sainsbury’s-Asda would lead to higher prices online and in store, higher prices at petrol forecourts, reductions in the quality and range of products available, fewer online delivery options for consumers, and an overall weaker customer experience.In a damning report that put an end to the merger, it concluded that “UK shoppers and motorists would be worse off if Sainsbury’s and Asda… were to merge”.Here, FoodBev has collated some of the best reaction from stakeholders within the UK grocery retail industry – many of whom see the CMA’s intervention as welcome relief. The CMA’s decision to block the Sainsbury’s-Asda merger puts the heat on Sainsbury’s CEO Mike Coupe. Whatever the rights or wrongs of the CMA’s decision, he appears to have wasted a year chasing an impossible dream while its competitors took full advantage of its distraction. Its results over the last year have been poor, with store standards falling noticeably, and it must now refocus on retail basics rather than chase another big acquisition.One of the key mistakes Coupe made was in failing to offer any assurances on price cuts until the CMA’s devastating provisional findings in February: it built the rationale for the merger on the rather vague notion that it would reduce prices by 10% by putting pressure on major suppliers, though it didn’t make it clear how many products this would include. It only made some assurances of audited price investment later, but this might have had more sway if it had offered them at the start.The confidence Coupe placed in getting the deal past the CMA in light of its previous – generous – decision to allow Tesco to buy Booker looks like a bad misjudgement now. Mike Coupe may feel hard done by, but the CMA made clear that the Tesco-Booker deal was passed because it considered the acquisition to be a vertical one, by a retailer of a wholesaler, and so viewed that the combination did not significantly damage the competitiveness of either market. Suppliers to the big supermarkets will be extremely relieved that the merger has been blocked by the CMA. Suppliers had been worried that the merger would have meant the merged businesses would have far too much power over them, which would likely have led to savage price cuts.The decision will provide certainty to suppliers, who will now be able to invest and innovate with confidence. Duncan StephensMoore Stephens Food Advisory Group Patrick O’BrienGlobalData Share with your network: Tags: AsdaSainsbury’sUK John PerrySupply chain consultancy Scala The big four have been losing market share to the discounters for some time now, and on top of this have the added pressure of global retail giant Amazon entering the grocery sector.It therefore seems rather short-sighted that the CMA has blocked the proposed Sainsbury’s-Asda merger over fears it would reduce competition and therefore raise prices for consumers. With competition so rife in this constantly changing sector, it’s actually quite unlikely that this merger would have had any significant impact on the consumer.Meanwhile, if Amazon eventually achieves the online dominance in grocery that it has achieved elsewhere, it’s quite possible that in years to come we will look back in dismay at the decline of UK grocery retailers.This merger would have given Sainsbury’s and Asda the opportunity to become more efficient and compete as effectively as possible. Given the current state of bricks-and-mortar stores, blocking the Sainsbury’s and Asda merger can only be a positive move for the market. If this was to happen then this would drive prices higher and penalise consumers in doing so. The implementation of retail tech would enable supermarket retailers to enrich the shopping experience for consumers whilst broadening their in-store offering.It would be beneficial for supermarkets to consider implementing retail tech into their offering in bricks and mortar stores. This would level the playing field between in store and online sectors whilst driving prices down for consumers in the process. Retailers have a duty to find a balance in their responsibilities to their employees and consumers in ensuring that food quality, choice and a competitive market is available. Will BroomeRetail tech app Ubamarket We have been clear from the beginning of the proposed merger about two things. Firstly, that retail is rapidly changing and standing still is not an option, and secondly that we will always ensure our international markets are strong local businesses powered by Walmart.While we’re disappointed by the CMA’s final report and conclusions, our focus now is continuing to position Asda as a strong UK retailer delivering for customers. Walmart will ensure Asda has the resources it needs to achieve that.Read more reaction from inside Sainsbury’s, Asda and the CMA here. Jonathan BrantonLaw firm DWF Given the stance that the CMA took with its provisional report in February, this announcement should come as no real surprise. It has clearly decided that whatever concessions Sainsbury’s and Asda were willing to make were not enough to allay its deep concerns over the potential impact on competitive tension in the market.It will be interesting to see what the CMA does the next time we see two of the UK’s biggest competitors attempt to merge – whether it be in retail, energy or any other sector. Every merger is different of course, as are the perceived benefits and risks involved. However, today’s firm decision may mean companies take a bigger pause for thought in the future before investing in a mega-merger dependent on such a critically sensitive CMA approval. Richard CurryProperty consultants Rapleys The problem Sainsbury’s and Asda faced is that there is a clear lack of credible competition for the CMA to turn to, and fewer still who would be interested in the stores that would have needed to have been disposed of. Particularly when you factor in the fuel retail element, the only two alternatives that offer the same product range and shopping experience are Tesco and Morrisons – who are unlikely to be interested in enough of the large format stores which might have made a difference to the CMA.Walmart will now be actively reviewing their strategy as they clearly will still want to offload Asda. There will likely be many suitors waiting in the wings, from private equity to retail joint ventures. The Asda brand remains strong and the stores, while many will require updating, will be a tempting prospect for many investors who may, for instance, seek to rationalise the portfolio and cut and splice the space to generate maximum value. There have been plenty of retailers who have used the media interest in the proposed merger to push themselves forward as ready to take advantage, should stores come on to the open market or if investor landlords are seeking viable retail tenants for ex-Asda stores.At the same time, people are still waiting to see what Amazon’s next move in the UK market will be. With the Whole Foods business, and the recent partnership with Casino in Europe, food retail is an area of interest for them. It would be ironic indeed were Amazon to end up buying some or all of the Asda portfolio given Walmart’s exit from the UK to focus on the US is almost entirely driven by a desire to defend against Amazon on home soil. Judith McKennaWalmartlast_img read more