The CEO of Sainsbury’s on TV this morning gave a categoric assurance that if the merger was to go ahead, that there would be no store closures or job losses as a result.
He went on to say that prices of staple products are likely to reduce in price because of the joint ability to negotiate more favourable terms with major suppliers.
It is purely semantic as the merger is unlikely to receive approval from the Monopolies and Mergers Commission, according to knowledgeable commentators.
They gave approval for Tesco and Bookers to merge and Tesco has a bigger market share than Sainsburys and Asda combined. It just seems an odd fit, will Sainsbury move their prices down or Asda up ?
I think if you look at like-for-like items the prices will be very similar to each other* and it is these “everyday value” items that they will be looking to use their increased bargaining power to reduce. Although, after this initial benefit it’s quite likely that longer term, the reduced competition will actually increase prices for consumers. Hopefully this will be the catalyst for Amazon to break into the UK grocery market in a big way which will be a disruptor in the market to drive prices down.
* Sainsbury’s seems more expensive because the have more tempting luxury items at higher prices which increases the price of your shop.
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