Sainsbury's and Asda may have to sell at least 73 supermarkets in order for the proposed merger to go ahead, according to the BBC.
Analysing new research from Maximise UK, the broadcaster said that the areas most under threat of mass closures are the south-east and north-west of England.
Lack Of Precedent
Speaking to the BBC, David Haywood, founder of Maximise UK, said that he believes at least 6% or 73 stores of the combined group’s supermarkets are at risk.
Haywood said that “there hasn't been a retail deal like this in more than a decade", noting that the Safeway-Morrisons tie up in 2004 was a similarly complex merger at the time.
"The real focus will be on how Sainsbury's and Asda's main supermarkets operate at a local level and how they overlap," he said. "The CMA will be concerned about whether the deal reduces the number of competing brands within a 10 or 15 minute drive time.”
In The Other Corner
Maximise UK’s research does not include Aldi and Lidl as effective competitor brands, but it says if the Competition and Markets Authority takes a more conservative view and excludes the discounters, then the number of potential store disposals leaps to 245, which would take away from the financial merits of the merger.
Haywood has downplayed the number of potential store closures, as he says there are not as many store overlaps as critics think. Sainsbury's occupies a lot of the South East of England while Asda is a major player in the North.
Speaking to the broadcaster, Haywood said that 66% of the stores in these areas are over 20,000 square feet in size. He said, “the key issue is who can actually acquire store locations of this size. They're typically too big for an Aldi or a Lidl."
British lawmakers have recently announced that they were appealing to the CMA for information regarding the proposed £7.3 billion pound takeover over concerns for the impact such a merger would have on the grocery supply chain.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Aidan O'Sullivan. Click subscribe to sign up to ESM: European Supermarket Magazine.