0800 644 6080
Call FREE from Landline and Mobile
Est. 1989

Asda and Sainsbury’s Merger Could Pile Pressure on Suppliers

Written by: Keith Tully

Reviewed: Tuesday 1st May, 2018

Plans to merge the two supermarket giants Asda and Sainsbury’s could result in significant financial pressures being brought to bear on companies within their combined supply chains.

Mike Coupe, chief executive of Sainsbury’s, has said that the merger will enable his company to offer its customers price cuts of 10 per cent on everyday items.

The concern among suppliers and their representative bodies is that efforts to deliver on the promise of sizable price cuts for consumers will have major knock on effects.

Supermarket supply chains involve thousands of companies and employees across the country and there are concerns in some quarters that significant price cuts at a merged Asda, Sainsbury’s operation will eventually force some businesses into insolvency.

“If suppliers are asked to reduce prices by 10 per cent to stay on the Sainsbury’s-Asda supply chain, then some small companies could go out of business,” Ian Cass from the Forum of Private Business has told the BBC.

Mr Cass expressed the concern that a merged Asda and Sainsbury’s business would become exceptionally powerful within the grocery retailing sector and could pressure suppliers into accepting unfavourable terms as a result.

The Competition and Markets Authority has said that it expects to see the proposed merger of the two supermarket giants referred to its experts for review in due course.

Mike Cherry, national chairman of the Federation of Small Businesses, has called for bosses of Asda and Sainsbury’s to “give reassurance that cost savings won’t be achieved simply by milking their small suppliers for all they’re worth”.

“A merger of this size will concentrate a lot of power in the hands of one giant company, and it’s important that power isn’t misused to coerce small suppliers into accepting unfair contracts and poor payment terms,” he said.

Together, Asda and Sainsbury’s would account for around a 30 per cent share of the UK’s overall grocery retail market and the merged operation would overtake Tesco to become the country’s largest supermarket chain.

There are currently a total of close to 2,800 Asda and Sainsbury’s stores throughout the UK and the two businesses collectively employ in the region of 330,000 people nationwide.

Keith Tully

Keith Tully

Join Keith Tully on Linked In Join Keith Tully on Google Plus Follow Keith Tully on Twitter

Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

Meet our Team of Experts

Who we help

  • Company Directors
  • Finance Directors
  • Sole Traders
  • Accountants
  • Small Businesses
  • Large Businesses
  • Partnerships

Contact our team

Jonathan Munnery
Andrew MacKenzie
Julie Palmer
Thomas Mckay
Keith Tully
or Find your Nearest Office

Here at Real Business Rescue we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See PRIVACY POLICY

Our numbers speak for themselves

Number of UK Offices
Directors Helped
Licensed Insolvency Practitioners