Google+ Twitter Pinterest Facebook LinkedIn Wordpress

Supermarket Mergers and Supply Chain Consequences

Supermarket Mergers and Supply Chain Consequences Since their acquisition of Argos back in 2016, it seems Sainsburys have been left with an insatiable appetite for more; and as we approach mid-year 2018, the FMCG retailer has revealed plans to merge with their supposedly regarded rivals, north of the wall; Asda.

Following the successful integration of Argos into Sainsbury’s stores two years previous, many may now question whether the true purpose of this strategy was more advanced, than to seemingly provide consumers with added value, and a more convenient in-store customer-experience.

Certainly, as plans further develop for Sainsburys, it seems clear that they have bigger ideas, which apparently involve wider-reaching plans to purportedly protect their high-street stores against the ever-increasing threat from the all-encompassing ecommerce beast, Amazon.

Whatever the intended plans to prevail are for this proposed merger, there will be many of the opinion that the future of retail, lies in online commerce; who argue that there is no longer a niche in the market for discount high-street stores, due to the availability and value for money offered by online retailers.

In spite of this, Sainsburys’ plans disclosed so far, not only propose to create Britain’s biggest supermarket chain - with more than 2800 stores (including Argos, which is owned by Sainsbury’s) – but could ultimately result in them surpassing current leader, Tesco. 

Whilst historically there has thought to exist an implicit north, south divide between the two stores, it seems that differences have more recently been put aside, amidst both brands having spent years fighting common enemies: prestigious discount stores, Lidl and Aldi. 

This competition may additionally explain Tesco’s 2018, £4bn takeover of wholesaler Booker, which in turn, generated the creation of a new dominant player in Britain’s £200bn-a-year food market. Moreover, allegedly Amazon and Morrisons are also negotiating their own deal to deliver groceries using the ‘pantry’ delivery service.

It appears that the competition is truly on; as Sainsbury’s seemingly sudden venture, further resounds retailers’ rising retaliation, for monopolisation of the supermarket sector, and with this, the urge to continue to delight their consumers by delivering lower prices, improved convenience, and an endless variety of products, in-store.

Yet, whilst these mergers on the surface, may equate to initial financial gains, and increased market share power for the retailers involved; exactly what significance does this shift in shopping circumstance mean for the consumer, and more importantly, what actually are the wider-reaching implications involved for Supply Chains?

At present, direct job losses and store closures have initially been ruled out; and despite fears surrounding Brexit, the merge is predicted to provide a 10% reduction in produce prices for consumers.

Statistics from the Office for National Statistics (ONS) reflect that the retail sector is undeniably experiencing significant and rapid change, as customer shopping habits continue to evolve; with further reports predicting that if this North / South merge is approved by the Competition Authority, it will result in the biggest supermarket chain in Britain, dominating a 30% market place share; facilitating significant cost savings, in turn, generating profit.

It has however been reported, that these projected lower consumer prices could become the unfortunate burden of the supply chain; meaning that whilst these estimated savings may be successfully achieved and delivered, they will more likely than not, only materialise, by cutting costs further down the supply chain.

Realistically, it is this necessity for cost savings which could dictate the required negotiation for lower prices when sourcing direct from suppliers, which could serve to threaten the wider-reaching supply chain operations.

This in turn, is fuelling fears that, due to a decrease in supermarket retail prices being passed through to output prices for suppliers, supply chain output could become significantly reduced, and unavoidably result in many unfortunate job losses within the Logistics Industry.

Presently, whilst the true impact this merger and the wider-reaching implications which could pose a risk to the greater supply chain, remain unknown; only time will tell us whether the result will be a hap-hazard hindrance or sweeping success for the supermarket sector.

 

⇐ Back to Featured Articles




Testimonials

More Testimonials

Latest News

Supply Chain Matters – Third-Quarter Newsletter 2018

 Supply Chain Matters is back to update its readers. Covering topics including upcoming events, and successful…

Continue Reading

GH shortlisted as finalists for The Supply Chain Excellence Awards 2018

  The Gideon Hillman Consulting team of specialist Logistics and Supply Chain Consultants, are pleased to…

Continue Reading

More News Stories

Featured Articles

Sustainable Fashion; Idolised Ideal or Attainable Attire?

Fashion plays an important role in the global economy and is responsible for annual worldwide revenues of in excess of £1 trillion; supporting hundreds…

How 3D printing is changing supply

After 30 years in development, practical applications of 3D printing are now becoming commonplace and disrupting traditional businesses. Supply chains…

Supermarket Mergers and Supply Chain Consequences

Since their acquisition of Argos back in 2016, it seems Sainsburys have been left with an insatiable appetite for more; and as we approach mid-year 2018, the…

CVA shapes world of Retail and Fulfilment

Attributed to the deadly combination of ever-changing consumer behaviour, the current economic pressures on high street retailers, and the lucrative era of…

Digital Marketing and Social Media encourage ‘Direct to Consumer’ Supply Chain trend

 Reports from the Office for National Statistics (ONS) showed that in 2017, 90% of households in Great Britain had internet access, an increase from 89%…

Rise of the ‘Cobots’

With Brexit looming on the horizon, the government pledging to reduce immigration, and a consequential drastic decrease in seasonal workers from Eastern…

Warehouses in the Hands of Wearable Tech

The future of the warehouse, may soon literally reside in hands monitored by ‘wearable technologies’ - devices connected to the Internet or to…

How technology is constructing the ‘Warehouse of the Future’

Every day, technology is growing to become more intelligent and advanced. Artificial Intelligence, Warehouse Automation, the threat of robots replacing the…

Logistical Elasticity

In these technological times, the interplay between supply and demand, has transformed from a supplier push to a consumer pull, and is what now defines modern…

Re-defining The logistics of Brand Loyalty

Entering into 2018, the pace of consumer demand for ecommerce is not showing any signs of slowing down; and as innovative technology ever evolves; social and…

Gideon Hillman Consulting is a trading name of The Supply Chain Consulting Group Ltd is registered in England and Wales.
Company Registration No: 09751027. Registered office at Highdown House, 11 Highdown Road, Leamington Spa, CV31 1XT. UK
A supply chain and logistics specialist with knowledge of process modelling, enterprise resource planning and warehouse management

CMI Awards Finalist 2010 SHD Logistics Awards UKWA Customer Service Award Finalist 2014 SHD Logistics Awards Finalist 2016 UKWA Winner 2016 SHD Logistics Awards Finalist 2015 ISO 9001 RegisteredLogistics Awards Finalist 2018