Bord Bia conducts 'action plan' in response to Sainsbury's/Asda merger

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Sainsbury's market share was down 0.3 percentage points from the same period in 2017, while Asda was down 0.1 percentage points.

Bernstein's Bruno Monteyne pointed to the risks of bringing together companies with different cultures, noting Morrisons-Safeway lost 28 percent of their sales through a combination of store sales, integration problems and culture clash when they merged in 2004.

The deal combines Britain's second- and third-largest supermarket chains, giving the combined company 31.4 percent of the market and putting it ahead of the current leader, Tesco, which has 27.6 percent, according to data from Kantar Worldpanel.

The two have different cultures and appeal to different customers, with London-based Sainsbury's strong in own-brand products, and Asda, headquartered in Leeds, northern England, focused on price.

Some 15.8 million households bought their groceries at Asda over the past 12 weeks, 500,000 more than shopped at Sainsbury's.

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David Berry, director at Kantar Worldpanel, an worldwide organisation which tracks and analyses shopper behaviour, said the merger would effectively mean a huge change in the grocery landscape in the North. "Let's lend it, spend it, send it rolling along", crooned CEO Mike Coupe after Sainsbury's announced plans to merge its business with Asda, the United Kingdom retailer owned by Walmart. The like-for-like inflation rate is now 2.1% and is expected to fall further in the coming months.

That was the case this week when two major chains in Britain, Sainsbury's and Asda, said they were planning to join forces, potentially creating the country's biggest supermarket operator.

Monday's cash and share deal also provides a potential exit for Walmart, as Asda, which it bought in 1999 for 6.7 billion pounds, has struggled over the last five years.

"Given the competitive landscape in United Kingdom grocery retail, profitable growth and expansion opportunities are limited, so reducing resources makes sense — especially when there are other geographies and channels" with more opportunity for growth, said Moody's Lead Retail Analyst Charlie O'Shea. Sainsbury's slashed 2,000 positions in October.

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