Prices to be slashed as Sainsbury's and Asda confirm merger plans

Posted: 30 Apr 2018

Supermarket prices could be slashed by 10 per cent after Sainsbury's and Asda confirmed plans to merge.

Reports over the weekend suggested the two brands, which both have stores in Scunthorpe, could be set to join forces and the merger plans have been confirmed this morning.

It is hoped the move will secure the longevity of both brands, which have faced challenging times recently due to tough market competition.

Combined, Sainsbury's and Asda have a current market share of 31.4 per cent, compared to the rival Tesco chain, which has 27.6 per cent.

Sainsbury's chief executive Mike Coupe added the move would save the business around £500m in costs.

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While union representatives have voiced concerns over job losses, Sainsburys have stated there are no planned store closures or job losses as a result of the merger.

Sainsbury's chairman David Tyler said: "We believe that the combination of Sainsbury's and Asda will create substantial value for our shareholders and will be excellent news for our customers and our colleagues.

"As one of the largest employers in the country, the combined business will become an even greater contributor to the British economy.

The Sainsbury's branch on Doncaster Road in Scunthorpe

"The proposal will bring together two of the most experienced and talented management teams in retail at a time when the industry is undergoing rapid change."

While both brands will be maintained, with no current plans to close stores as a result of the merger, there are plans to reduce the cost of products shoppers buy regularly by 10 per cent.

Asda boss Roger Burnley said: "The combination of Asda and Sainsbury's into a single retailing group will be great news for Asda customers, allowing us to deliver even lower prices in store and even greater choice.

"Asda will continue to be Asda, but by coming together with Sainsbury's, supported by Walmart, we can further accelerate our existing strategy and make our offer even more compelling and competitive."

Asda's Burringham Road branch in Scunthorpe

It's not just Sainsbury's and Asda who have been shaking things up in a bid bid to increase its market share, as Morrisons, who hold 10.4 per cent, also recently brought out a savers range. The discount range which is now available in stores, is offering the likes of spaghetti for 20p and a bag of peas for just 68p.

Meanwhile, Aldi and Lidl which have a combined market share of 13.6 per cent, continue to sway shoppers away from the big guns with their value ranges.

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Responding to this morning’s formal announcement of the proposal to merge Sainsbury’s and Asda, Federation of Small Businesses national chairman Mike Cherry said: "A merger of this size will concentrate a lot of power in the hands of one giant company, and it’s important that power isn't misused to coerce small suppliers into accepting unfair contracts and poor payment terms.

"Those at the top of Sainsbury’s and Asda should explain how they plan to merge these two supply chains fairly, and give reassurance that cost savings won’t be achieved simply by milking their small suppliers for all they're worth.

"When investigating this proposed merger, the Competition and Markets Authority should be looking for cast-iron commitments that a positive standard will be set for working with smaller suppliers."

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