Amazon Threat Drives Sainsbury and Asda Proposed Merger

Sainsbury’s confirmed plans to merge with Asda this morning. The merger is being led by Sainsbury.

The two companies have a combined workforce of 360,000 people and the £12bn merger between the two companies has raised fears that suppliers would have to be forced to cut prices further, which is very damaging for smaller businesses.

 The merger, which will have to be approved by the Competition and Markets Authority (CMA), would create a supermarket giant in the UK. Tesco is currently top in regard to grocery market share, owning 25% of the market. Meanwhile, Sainsbury’s has 13.8% and Asda has 12.9%.
 
The combined group would represent 31.4% of UK’s grocery market and would comprise 2,800 stores.

The merger is being driven by the possibility of Amazon entering the UK groceries market, as well as the growth of discounter supermarkets such as Lidl and Aldi which are challenging the traditional chains.

High rent and rates plus internet competition is decimating the high streets.