UK retailers await Safeway report
event of the year, as it awaits the results of the Competition
Commission's report on who can bid for Safeway. The decision is
likely to reshape Britain's lucrative and extremely competitive
grocery retail industry.
The UK retailing industry is bracing itself for perhaps the biggest event of the year, as it awaits the results of the Competition Commission's report on who can bid for Safeway. The decision is likely to reshape Britain's lucrative and extremely competitive grocery retail industry.
Currently the four supermarket bidders - Morrisons, Tesco, Sainsbury, Asda - are still very much in the running, however it is widely tipped that only Morrisons will clear all the requirements that the Commission has stipulated to make a clear decision.
If Morrisons were to get the nod, it is widely perceived that its bid would create a more evenly matched retail grocery market in the UK. Currently Morrisons is by far the smallest of the bidders, with the majority of its retail outlets concentrated in the north of England.
Many analysts believe that if either Tesco or Asda - currently the number one and number two grocery retail chains in the UK - were to be successful in their bid attempt such a situation would result in an unfair balance in the retailer stakes - something the Commission will undoubtedly be poring over.
If Tesco were to win, it would extend its already substantial leading position and if Asda were to win it could create a duopoly. Both situations could potentially undermine the power of UK food consumers.
Perhaps the least likely to be given the nod is J Sainsbury. The struggling retailer was recently overtaken by Asda to become Britain's third biggest retailer. Historically, the UK food market has been a dog-eat-dog race between Tesco and Sainsbury, but in recent years Tesco's aggressive overseas expansion and successful marketing campaign has seen it go from strength to strength, largely at the expense of Sainsbury's market share. Its falling market share means that its position is certainly not the strongest in the bidding stakes.
The Competition Commission's report is due to be presented to the trade secretary Patricia Hewitt tomorrow, after which its contents may not be revealed until next month. However, if the results of the report are extremely clear cut, the results could be made public within the next week.
The Commisson's report contains an analysis of the impact of any takeover on competition locally and nationally as well as the effect on suppliers to the supermarket chains. The body's influence can block out any of the potential bidders as well as setting out concerns which it feels might be remedied. The most likely of these remedies is that the successful bidder would have to sell off any number of the 480 retail outlets the sale will include.
