With Fenwick midway through a reorganisation, House of Fraser agreeing to shutter underperforming stores to secure its future, and Debenhams battling to reinvent its offering, the town centre department store offering of the past simply hasn’t been paying its way for some time. It isn’t just because consumers are spending more of their money online. Instead we’re seeing supermarkets like Sainsbury’s with its Argos acquisition, its growing clothing and homewares departments, neatly presented alongside the core food offering which drives the footfall, become a much more attractive destination for shoppers who can get everything they want in one trip to a single store with free parking. Factor in Sainsbury’s canny acquisition of the Nectar loyalty scheme and the concession tenants it is targeting, like Specsavers, and it will inevitably gain market share across all categories. The greater margins from own label apparel and homewares will lift its profits and also increase its average basket size.
And now we have the proposed deal with Asda. On the deal itself, it seems to make inordinate commercial sense as it will invariably enable cost savings to be made across the group in the longer term. The CMA will be examining whether the deal will negatively impact consumers as a combined stable of 2800 stores and revenues of £51bn makes it a true giant, that will look retain its separate brands whilst combining to serve two very different customer profiles and offer them far greater choice.
Mark Hinds, CEO of Polymatica was one of many to comment: “One of the greatest challenges this mega-merger will pose is how the new retailer can use one of its biggest assets – data. Sainsbury’s recent acquisition of Nectar shows that the retailer clearly values customer information – not to mention every other source of data in the business. With a combined pool of data numbering in the tens of millions of shoppers, the new retailer will need to ensure its data is truly usable on the fly.”
Share