Sainsbury's-Asda-Walmart: Supermarket mega fashion brands to link?

By

Sandra Halliday

Published
Apr 28, 2018

The UK retail sector was shocked at the weekend as it emerged that two of its biggest supermarket names could combine. And if Sainsbury’s and Asda do merge, it would mean two of the most prominent fashion brands in the UK also coming together.

Sainsbury's owns Tu Clothing, which is the sixth biggest Fashion line in Britain. And, of course, Asda has the George range, which is also a major player in the UK clothing sector.

So what's actually happening? It seems that J Sainsbury is in talks with Asda parent Wal-mart about a surprise tie-up, potentially worth £10 billion, that would make the combined business bigger than UK number one Tesco.

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The story was broken by Sky News on Saturday with Sainsbury's later confirming that the two groups are in advanced talks about "a possible combination”. The story also said that the most likely way forward would be for Asda to become part of Sainsbury’s with Walmart taking a stake in the enlarge Sainsbury’s business.

Of course, it might never happen, given competition concerns. But Tesco's recent acquisition of Booker got through, and given the presence of multiple competitors (including relatively recent arrivals Aldi and Lidl), competition concerns may not be huge issue.

Whether they are or aren’t, it's highly likely that a number of stores would be sold off and/or closed given that some Sainsbury’s and Asda locations are quite close to each other. However, insiders told Sky News that job losses and closures were not a major factor in the talks. The fact that Asda is much stronger in northern Britain while Sainsbury's is stronger in the south could mean any closures will be minimal.

The merger would certainly give the enlarged business much greater buying power in the core grocery area, but also in fashion. Whether both Tu and George would survive though is open to question and the design and buying teams for both brands must be concerned at present.

Acquisitive Sainsbury's said it will issue an official announcement at 07:00 UK time on Monday, although that's unlikely to include news of a signed deal just yet... or maybe it will. We won't know until it happens so check back on Fashion Network to get all the updates.