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Asdabury's = hubris fuelled by Sainsburys Middle Eastern millions (it's Qatari, isn't it?) which will lead to a beast which is less than the sum of its parts
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I can't really see the synergy myself, beyond having one head office. Both are big enough to have adequate buying power. Many functions will need to be separate, some indefinitely. They will no doubt spend years and many millions migrating one or both to common logistics, PoS and accounting systems during which time they risk distracting and detracting from management and resources going to everything else. They will still have to manage separate propositions because they have different types of customer.
Everything will need to be gone through before they can cut the first sod. No doubt both are already in the middle of various "transformation projects"; there will be a freeze while it is all challenged, and when the integration kicks off all non-essential developments outside the big plan will be knocked back. When there is a massive store estate it takes a great deal of time and effort to make changes, and if it isn't done right the pain is huge, as indeed with Sainsburys warehouse automation project about a dozen years ago - I think they wrote off £250m, disregarding the effect on sales.
Glad I don't work there. But no doubt some senior executives' share option plans will come good and by the time it has become tricky they will all be elsewhere doing it again.
I hope it doesn't go as badly as I fear, for the sake of consumers and the staff.
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But do not worry the CEO has promised that everyday items will be 10% cheaper to undercut the opposition. How he will achieve this purely from economies of scale, without squeezing the supplier chain is unclear.
However what he really thinks is shown here! www.theguardian.com/business/2018/apr/30/sainsburys-mike-coupe-sings-were-in-the-money-itv-asda-merger
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>> But do not worry the CEO has promised that everyday items will be 10% cheaper
Sainsbury pre-tax profit is c. 4% I think, so I don't know where it will come from either.
However the other side of the buying power coin is pricing power. They will have a bit more of that, so maybe the merger isn't such good news for customers.
Perhaps he just means they will cut bread and milk by 10%. Look out farmers.
Last edited by: Manatee on Tue 1 May 18 at 19:01
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I think the immediate £500m of ‘synergies’ talked comes simply from comparing what each pays suppliers for product, where common products are purchased, and taking the lowest price. So that should be an easy (ish) win - I’ve done it myself on acquisition. Integrating systems, supply chains and head offices will be a much tougher gig, but the savings should be meaningful in the end... and as a customer, I’m pleased that the huge gap between the number one and number 2 in UK retail (Tesco 28ish % of grocery and Sainsburys 15ish %) could be closed!
I wonder who will buy the 3/4/500 stores that they might be required to dispose of though if it does go through; there’ll be some property investors reviewing their portfolios for potential overlap I imagine...
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I shouldn't think they have seen each other's cost prices, and they'll be muddied by funny money anyway (the kind that Tesco was approximate in accounting for).
I wouldn't be surprised if it is the smaller of the two that has the best buying prices when all is taken into account.
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>> I shouldn't think they have seen each other's cost prices, and they'll be muddied by
>> funny money anyway (the kind that Tesco was approximate in accounting for).
>>
>> I wouldn't be surprised if it is the smaller of the two that has the
>> best buying prices when all is taken into account.
>>
My understanding is that the data room contained anonymised (how I do not know) cost data... McKinsey have been working with JS for all of 2017 on ‘Value Chain’ analysis, which could easily have been a cover for this type of work ;)
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>>My understanding is that the data room contained anonymised (how I do not know) cost data
Supplier names redacted.
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>>I can't really see the synergy myself
I can't think why not.....
Just off the top of my head;
Logistics (warehousing, shipping, transporting, resource management)
Purchasing (ditch the most expensive of any similar products)
Insurance, Financial Management (cash & investment)
Management & staffing
Training
Overhead and real estate management
Shared services (HR, Finance, IT, Procurement)
Reduced investment (duplicated capital projects ceased)
Altered investment approach
Altered Competitive Risk Analysis, particularly in future business plan
Reduced cost of capital
Tax management
I could go on and on.
Of course, it needs to be done properly, and reflecting those savings in prices is not absolutely linked, but the transaction is a no brainer.
p.s. and you need to remember the difference between Capital and Operational expenditure.
Last edited by: No FM2R on Tue 1 May 18 at 20:29
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Sainsbury's haven't changed the IT at Argos (Home Retail) since purchasing them. I think Homebase are still on shared systems with Argos.
I don't get this merger. Sainsbury's used to like to think they were more upmarket and Asda are the low-end. Now a merger between Sainsbury's and John Lewis/Waitrose might make more sense. But JL is not up for sale and is owned by the staff isn't it?
Last edited by: rtj70 on Tue 1 May 18 at 20:33
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are still on shared systems with Argos.
>>
>> I don't get this merger. Sainsbury's used to like to think they were more upmarket
>> and Asda are the low-end. Now a merger between Sainsbury's and John Lewis/Waitrose might make
>> more sense.
The different customer bases (both geographically and in customer profile) are in theory a plus, provided they don't try to convert the Asda's to Sainsbury's or vice versa.
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>> Now a merger between Sainsbury's and John Lewis/Waitrose might make
more sense.
A wag in today's Telegraph suggests that for reasons of of social inclusion the next merger should be between Waitrose and Lidl.
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M&S is in talks with Poundstretcher.
If the merger comes off they are going to call it Stretch Marks.
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Sure but it takes time and money to realise it, and it's not risk-free. The big costs are in the stores. Retailing is complicated. Safeway gave Morrisons severe indigestion for years, in fact it pushed them into losses. Quite similar in some respects - different geographies and customer demographics.
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Near us we have say an Asda (hate that particular store and in need of refurb) opposite a reasonably small Sainsbury (in need of a refurb or just knock it down). About a mile away is a more modern and larger Asda. Near this larger Asda is a small Asda which used to be a Netto.
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I have disliked every ASDA store I've ever been in. I can't put my finger on the reason, though.
It's noticeable here, in our small town, how different Tesco's and Sainsbury's are.
A brand is the same wherever it is bought, but it's in the extra variety where Sainsbury's scores.
Just as an example: butter - Tesco has own label product and at the most, a couple of slightly more upmarket brands. Sainsbury's does own label, but the choice of premium butters is very much greater.
Generally, I find Sainsbury's own branded goods to be significantly more expensive than Tesco or Morrison's (another store on my "not like" list).
Tesco's discounts on nearly out of sell by date stock are MUCH more generous than Sainsbury's.
Aldi is our "go-to" shop for basics, although from visiting a couple newly refurbished Lidl stores, Aldi are falling behind in the discounters game.
TBH, if we had the money (and lots of it) I'd shop at M & S food a lot more. We don't have a Waitrose closer than Sheffield, about 15 miles away, so cannot comment on their VFM.
Last edited by: Roger. on Tue 1 May 18 at 22:00
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SWMBO does the weekly shop at Sainsburys and has done for over 40 years.Their Tu range of clothing is not bad value for shorts and beachwear.
I have never been in an Asda.
We do ,however ,do a Lidl run every couple of months to stock up on wines , particularly their Chablis and Merlot as well as their much cheaper than Sainsburys and excellent quality jam and marmalade, mixed nuts and porage oats.
We were there on Monday and I also bought a couple of their special offers, on some garden seat cushions and a small rucksack which was half the price of those in Blacks.
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I like asda for the beer choice, there was a really big one near me, had various beers that I couldn't seem to find else where. So I used to pop in if I was passing.
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>> and excellent quality jam and marmalade, mixed nuts and porage oats.
>>
We NEVER buy our jam and marmalade from anywhere other than Lidl.
Our nearest Lidl is in Sheffield, about 12 miles away. We bulk buy to make it worth going there.
Lidl daily shower spay is another favourite: it does the job and is very cheap, too. I always put at least 6 spray bottles of it in the trolley.
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Not so sure about shower spay.
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>>Just as an example: butter - Tesco has own label product and at the most, a couple of slightly more upmarket brands. Sainsbury's does own label, but the choice of premium butters is very much greater.
When I moved from Safeway / Morrison to Sainsburys I learnt a lot about products that I didn't know existed due to Sainsburys range being so much bigger. However with that came a whole load of inefficiencies for the same reason.
This is why Lidl and Aldi do so well - you dont get range there , you get maybe a couple of varieties at the most. But that means the space you have can be used so much better.
Take butter as an example:
Mr butter supplier, what is your best price to be our only supplier. In return we want ready to display cases, sized 43cm x 26.2 cm.
Alternatively your space is divided between several products , they need to be packed individually, more code checking, more ordering , more warehouse space etc etc, more planograms etc. The discounters customers are happy with that but Sainsburys are now in the position that they could not go down that road or they would lose their traditional customer.
I am so glad I am no longer in the supermarket game, I left Sainsburys when I could no longer ask my staff to do things which I did not believe in myself. From what I am hearing , it has got substantially worse than that and their CEO is taking absolutely pelters from their staff who, remember, are currently going through a redundancy process and he is on TV singing!
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I also think the whole price perception / importance that the supermarkets always come back to, is kind of misleading. Most customers know which supermarket is cheaper and even then, many customers will not choose the cheapest variety, the "Savers" version anyway.
People shop for a whole number of reasons mostly due to convenience at the end of the day.
People are also wise to the "10000 price drops in Tesco this week" marketing as they know the prices probably went up last week.
This merger very much sounds to me as a get rich scheme for investors and maybe key directors or whoever else. Yes there will be efficiencies to be made but not that will cover the costs of the whole process.
At the time of the Morrisons takeover of Safeway I remember hearing anecdotal stories of ken Morrison walking through Safeway head office,
what do you do
- I'm the bananas buyer.
What else do you do
- nothing, just bananas
We have a bananas buyer , he will do all bananas, we don't need you anymore.
There were stories of company cars being left all over the place for fleet companies to round up from disgruntled staff as well!
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>> there will be efficiencies to be made but not that will cover the costs of the whole process.
You are almost certainly quite wrong.
>> I remember hearing anecdotal stories of ken Morrison ..........
If that were true then every one of them would have sued and won. So there's probably a reason it's known as "anecdotal".
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I was working in the IT team at Safeway when Morrisons took over,. The Anecdotal tales are mostly based on actual events , which is why the whole takeover was a complete and utter shambles. Ken wasnt removed from his role for no good reason.
I have heard that this is a move driven by Sainsbury. Asda is not doing well and its american parent wants to cut its exposure.
Last edited by: Zero on Wed 2 May 18 at 20:02
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>>I was working in the IT team at Safeway when Morrisons took over!
Didn't realise that - what aspects were you working on?
Was it very complicated to go from safeway's SM3 stock management system to Morrisons notepads and pens???
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I was working on the support team for the in-store servers, and the comms back to the mainframe in Hayes.
>> Was it very complicated to go from safeway's SM3 stock management system to Morrisons notepads
>> and pens???
No idea, Morrisons said they would do it all themselves, rip out the EPOS and put in their own "tills" so we just shut up shop and moved out.
And they said they would use their own distribution systems. Trouble was they didn't have one south of Watford. Had to reopen at vastly inflated prices, the ones they shut down.
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Couldn't believe it when they ditched the Stock management system with its stock control, forecast sales, shelf fills and replaced it with order pads where staff physically walked the sections and manually recorded how many cases they wanted to order in and then key it in to the computer!
Mind you Morrisons did many things that left us all scratching our heads!
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>>Trouble was they didn't have one south of Watford<<
I'm sure Safeway were at the Cribbs Causeway site in Bristol before it became the Morrisons tray store?
Pat
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I can tell you it is very "Ken Morrison", true or not.
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This isn’t fair, but........The Asda in yer face green is off putting. The fat tattooed birds are off putting. Sainsbury seems to be the go to place if you want a supermarket and don’t want to think about it too much. It’s just easy and generally middle of the road OK. I love our local smallish Lidl.
Now the surprise. Her behind the doors has basically ditched Sains for Waitrose for deliveries and the quality of service is way above the Lippy gits from sains AND the prices are very reasonable and in a lot of cases......cheaper!
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A 70s tune about Tesco, Safe Way, Fine Fair, Co-op and a shopping list.
Possibly my favourite song ever, too.
www.youtube.com/watch?v=bxTS_NZOIlg
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I'd forgotten about that. I worked at Fine Fare, about 48 years ago. Evening and Saturday job.
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>> I'd forgotten about that. I worked at Fine Fare, about 48 years ago. Evening and
>> Saturday job.
HAd similar with Morrisons around 76. Mostly price stickering goods in the warehouse before they went on the shelves. Occasionally operating the baler that compressed waste cardboard - would be far to dangerous for a 16yo these days.
Paid princely sum of 43.5p/hr.
Last edited by: Bromptonaut on Thu 3 May 18 at 14:24
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>> Paid princely sum of 43.5p/hr.
Blimey! I was a Saturday morning butcher's boy 70 years ago. That must mean you are EVEN older than me!
I was paid 12/6d (62.5p) for the Saturday morning and Tuesday evening after school.
Any advance?
Last edited by: VxFan on Fri 4 May 18 at 01:53
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I wasn't paid much more than you...30/- for 3 evenings and all day Saturday. Both were before 1970s superinflation. I went for lunch on Saturdays to the sit-down chippy, fish chips peas tea bread & butter 3/6 (17.5p for the young 'uns).
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Fish, chips, mushy peas, bread n butter and a pot of tea now £5.30 at my regular chippy. That’s 31p ( 30p with tip) more than I pay for my quarterly hair cut.
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>> Fish, chips, mushy peas, bread n butter and a pot of tea now £5.30 at
>> my regular chippy. That’s 31p ( 30p with tip) more than I pay for my
>> quarterly hair cut.
>>
That probably works out at a pound a hair.
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www.bbc.com/news/business-43954632
Where in God's name do they get these clowns?
Proof, if proof were needed, that the BBC is in the entertainment business, it's not a news organisation.
Last edited by: No FM2R on Fri 4 May 18 at 18:27
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Sorry I'm no doubt missing something but who are you referring to?
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Sorry, I should have been clearer....
Simon Jack
Business editor
@BBCSimonJack on Twitter
Last edited by: No FM2R on Fri 4 May 18 at 19:20
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Sorry none the wiser about which bit is stupid?
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The entire article is naive, incomplete, misleading and simplistic. It adds nothing of value and I cannot see who it is aimed at.
Anybody who has experience of such things will disregard it as meaningless, anybody who has no experience of such things will learn nothing.
I can only assume it is for entertainment only.
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>> The entire article is naive, incomplete, misleading and simplistic.
You missed out contradictory.
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anybody who has
>> no experience of such things will learn nothing.
I think that is who it is aimed at. Possibly a click bait piece since its topical?
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Mr and Mrs Asda-Sainsbury... - Roger.
