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LONDON (Alliance News) - Kantar Worldpanel on Tuesday said the proposed merger between J Sainsbury PLC and Walmart Inc's Asda could create a firm with a market share some 3.8 percentage points higher than that of current leader Tesco PLC.
Kantar - based on data for the 12 weeks to April 22 - said the combination of Sainsbury's and Asda would create a company with a possible grocery market share of 31.4%. This compares to Tesco's market share of 27.6% for the same period, unchanged from a year before.
Within this combined figure of 31.4%, Kantar said Sainsbury's market share over the period came in at 15.9% and Asda's at 15.5%. These figures, it added, had fallen by 0.3 percentage points and 0.1 points respectively year-on-year.
In terms of geographical overlap, Kantar said Sainsbury's registers 59% of its sales in London and the south-east of England. By contrast, Asda brings in two-thirds of its sales outside of these areas.
Commenting on the merger, Kantar's head of retail & consumer insight Fraser McKevitt said: "This is a pivotal moment for the British grocery market. A merger between Sainsbury's and Asda would transform the traditional landscape placing nearly a third of market share in the hands of the joint supermarket giant, though the march of the discounters – and any enforced store closures – could impact this figure."
"The two supermarkets appeal to different customer bases," he added. "Asda achieves nearly two-thirds of its sales outside London and the south east of England in contrast to Sainsbury's, which registers 59% of its sales in those two areas. Sainsbury's also appeals to more affluent shoppers (ABC1): this demographic accounted for 62% of all sales at Sainsbury’s in comparison to 46% of sales at Asda."
Looking at the UK grocery market as a whole for the 12 weeks to April 22, growth was at it slowest since March 2017 at 2.0% due to lower grocery prices. Like-for-like inflation stands at 2.1% and Kantar expects this to fall further in the coming months.
Grocery inflation for the period was 2.1%, Kantar said, with prices rising since the end of 2016. The fastest growing markets, it said, are butter, bottled colas and bread. The fallers include ambient cooking sauces, fresh poultry, and laundry detergent.
Consumer spend at Sainsbury's for the period rose 0.2% to GBP4.26 billion, and for Asda it increased 1.4% to GBP4.16 billion. Tesco's, by comparison, was up 2.1% year-on-year at GBP7.41 billion.
The fastest grower was online grocer Ocado at 13% to GBP332.0 million. FTSE 250-listed Ocado was up 2.2% at 550.20p early Tuesday.
Low-price competitors Lidl and Aldi posted 9.1% and 7.7% year-on-year consumer spend growth respectively for the period, while Wm Morrison Supermarkets increased 2.2%, Waitrose by 0.2%, and Iceland by 0.2%. Co-op was the only faller, down 0.4%.
In terms of market share, Aldi's increased to 7.3% for the 12 weeks to April 22 compared to 6.9% before, with Lidl's increasing to 5.4% from 5.0%.
Morrisons held its market share at 10.5%, while Waitrose's dipped to 5.1% from 5.2%, and Co-op to 6.0% from 6.1%.
McKevitt added: "Tesco and Morrisons both performed strongly this period. Morrisons was crowned the fastest-growing traditional supermarket, raking in sales growth of 2.2% and holding market share at 10.5%.
"Although Morrisons continues to prove a favourite with shoppers in its northern heartlands the retailer is also excelling in the capital, where it is growing at its fastest rate. Meanwhile, for the twelfth consecutive period, Tesco has grown more than 2.0% – the first time the retailer has achieved this since March 2011."
Tesco shares were down 0.4% early Tuesday at 235.00 pence each, while Morrisons was down 1.3% at 239.90p. Sainsbury's were up 1.5% at 313.50, having closed 15% higher on Monday.
Monday's share price rise came after Sainsbury's announced a proposed merger deal with Walmart's Asda, which could create a retail giant worth in excess of GBP13 billion and with revenue of GBP51 billion.
The FTSE 100 grocer said it had agreed a deal which values Asda at around GBP7.3 billion on a debt-free, cash-free and pension free basis. As part of the deal, Walmart will receive 42% of the issued share capital in the combined business - though will hold no more than 29.9% of voting rights - and receive GBP2.98 billion in cash.
The equity market capitalisation of Sainsbury's on Friday stood at GBP5.92 billion.
Sainsbury's also announced 2017 results on Monday, showing a drop in pretax profit to GPB409.0 million from GBP503.0 million due to exceptional costs. Sales rose to GBP31.74 billion from GBP29.11 billion, with like-for-like sales excluding fuel up 1.3% year-on-year and including fuel 1.4%.
