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Booker’s chief executive Charles Wilson has said the £3.7bn merger with Tesco will allow the wholesaler to provide an improved offering to its retailers while achieving increased shopper satisfaction.
Speaking to RN about this morning’s announcement Mr Wilson said he sees the deal as an opportunity to help Booker improve its offering.
Asked if he was worried about Booker’s members’ reaction to the news he said: “What we’ve got to do is show how by working with Tesco we can help those retailers prosper.
“[Those in support of the news] can see the benefit which is that it improves [the offering] for their consumer.”
Mr Wilson confirmed Booker would continue to make autonomous decisions but symbol aspects such as symbol groups’ own label would benefit from access to Tesco’s supply chain.
In its presentation to shareholders, Tesco states the benefits for independent retailers, caterers and small businesses will be:
Further enhances choice, price and service, enabling business customers to offer better value and quality to their consumers
An improvement in value equation via enhanced efficiency
A significant improvement in delivery service via utilisation of Tesco range and delivery fleet
Strengthens the Premier, Londis, Budgens and Family Shopper proposition
Access to Tesco banking, mobile and PayQwiq services
A positive contribution to local communities through supporting small businesses
While, adding the merger would combine the following capabilities:
Market leading product development (own label), and procurement expertise
Extensive market reach across stores, cash & carry, home/business delivery and click & collect
A service enhancing digital infrastructure
The opportunity to leverage financial services and mobile for customers’ and consumers’ benefit
An attractive opportunity for new innovation
Wholesale consultant David Gilroy says: "It’s a total game-changer. It re-writes the rules in the UK grocery market given that suppliers have retail and wholesale differential pricing.
"If it goes ahead the big win for Tesco will be on buying terms. And will they pass the benefits on to their customers? Also, will they be offering Tesco branding to small stores? There’s no doubt that Tesco branding would be more compelling to consumers than the current offerings. But not in poorly set up stores.
"If the deal goes ahead I can see other retail/wholesale mergers and this will breakdown barriers in the UK food trade.
"The advantage for small stores is that they could benefit from Tesco branding/quality and better pricing. But the disadvantage could be less competition in the market and less choice for small stores. It’s too early to tell and all to play for."
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