The Competition and Markets Authority’s (CMA) investigation into the Sainsbury’s-Asda merger could help discount and bargain supermarket chains increase their market share, industry experts have warned.
The CMA’s phase one investigation into the deal announced in April will examine whether choice and pricing will be impacted. Both supermarkets have asked the CMA to fast-track the investigation to a more in-depth phase two process.
GlobalData retail associate analyst, Thomas Brereton told RN the CMA could ask Asda to sell the Netto stores it acquired in 2010 to meet its conditions. “Should the CMA force sales of stores, parts of the estate that once was Netto may be first for consideration," he said.
“If Netto stores are passed on, the likely contenders are Iceland and Lidl. Iceland is looking to rebrand its image alongside the expansion of stores, as demonstrated by its upcoming takeover of 19 Poundworld stores. Lidl remains a possibility given its £1.5bn expansion pledge, but the average ex-Netto store may still be slightly too small.”
Shore Capital director Clive Black added that other discount stores could be interested. “The majority of former Netto stores are along the M62 corridor in the north, but Aldi and Lidl aren’t short of stores in those areas," he said. "Waitrose and Marks & Spencer might want them, but their balance sheet for expansion is questionable. It poses the question whether Home Bargains and B&M wish to operate a supermarket?"
Mr Black added Aldi may look to expand in Northern Ireland. “Sainsbury’s, Asda and Tesco have a 70% share in Northern Ireland, whereas Aldi doesn’t have a major presence.”
Harj Gill, of Select & Save The Windmill in Birmingham, said: “An Aldi is opening nearby and we’re competing by ensuring promotional items are always visible and offering services they don’t, such as food to go.”
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