75 Asda stores at risk of closing in merger with Sainsbury’s, according to GlobalData

GlobalData, the retail research and consulting agency, claims that at least 75 ASDA stores could close in the merger with Sainsbury’s.

This comes following the news that Asda and Sainsbury’s have agreed to merge in a deal that will create a combined market share for food and grocery of 23.3%.

Patrick O’Brien, UK retail research director at GlobalData, explained: “Overall, we see this as a defensive merger, as a way of halting the long term decline in profit margins both have suffered.

“Aldi and Lidl continue to take market share, and Asda and Sainsbury’s may believe that by combining to become the largest UK food retailer, it can battle more effectively against them with greater buying scale.”

Once the deal is complete, the two supermarket chains have a combined revenues of around £51bn for 2017, and operate from a network of more than 2,800 Sainsbury’s, Asda and Argos stores.

There are currently no planned Sainsbury’s or Asda store closures as a result of the merger.

Patrick, however, said: “Our initial research found that while almost half Asda stores had a Sainsbury’s in the same postal district (the first half of the postcode, known as the ‘outcode’), many of these were Sainsbury’s Local stores, which arguably could be excluded as they serve a different shopper mission.

“Taking these out leaves 197 Asda stores, however this is not definitive as stores in different postcodes can be geographically very close, and some stores in the same postcode district could, feasibly, be far away enough not to be considered competitors.

“Looking at it by the smaller postcode sector (the first half of the postcode plus the first digit of the second half), 75 Asda stores have a Sainsbury’s excluding Locals) in the same sector. We think these 75 stores would be the absolute minimum that the CMA will want disposed of.”

The combined business will also be chaired by the Sainsbury’s chairman and led by the Sainsbury’s CEO and CFO. Asda will continue to be run from Leeds with its own CEO, who will join the group operating board.

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