What will a Sainsbury and ASDA merger mean for UK retail?

The confirmation in April 2018 of a merger between retail grocery giants Sainsbury’s and ASDA will likely have a massive impact on the UK retail market. Whether that impact will be good or bad remains to be seen. With previous individual market shares of 15.9 per cent and 15.5 per cent respectively, the combined share of more than 30 per cent means this new “super” supermarket will become the country’s grocery leader.

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Competitive Edge

This means that the new store, which has not yet been named, will hold almost a third of the market share, toppling Tesco off the top of grocery leader board. This potential domination of the retail arena could see the recent popularity of discount stores such as Lidl or Aldi, who are increasing their own market share, diminish; such a merger will give Sainsbury’s and ASDA the competitive edge.

Own-Brand vs Premium

Historically, the Sainsbury’s brand has been synonymous with the better-off shopper, although introductions of a discount range and the clothing “Tu” have helped to reach customers who are less affluent. With ASDA making their reputation on their discounted range and George clothing line, offering excellent value for money, they now offer a premium range, which has attracted a different customer base in recent years.

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In Store Media

With an already healthy customer base, how is the new venture going to attract further customers to its stores? One of the ways they will do this is the through in store media, which has been proven to enhance the customer journey; see https://moodmedia.co.uk/in-store-music-for-business/. Finding the right music can not only improve a customer’s shopping experience, but it can also have an influence on whether they return time and time again.

Future Success

No matter what the future holds for the UK’s retail market, with two of the country’s grocery heavyweights joining forces, consumers will likely receive a new and innovative kind of customer experience. Hoping that this powerful union will dominate the retail landscape, the forces behind the merger will be strategising ways to eliminate the competition, particularly the European discount stores. With customer loyalty being high on the wish list of all supermarkets, maybe it isn’t going to be quite as easy as Sainsbury’s and ASDA are hoping it will be.