Takeover comes just in time for Safeway

Related tags Cent Market share Asda Sainsbury's

The imminent takeover of Safeway by Morrisons can not come soon
enough, it seems.

The latest supermarket sales data from TNS released this week shows that Safeway's sales are falling faster than any of the other major supermarket groups, a decline which Morrisons will want to act quickly to address.

Safeway's sales fell by 4 per cent in the 12 weeks to 7 December according to the TNS figures, pushing its market share down from 10.1 per cent to 9.2 per cent. The problem is primarily one of price - Safeway has some of the highest prices in a market which is becoming increasingly price-conscious.

But this is where the effect of the takeover by Morrisons will be seen the most clearly. Morrisons is one of the cheapest grocery retailers in the UK, and Safeway customers are likely to see prices fall by up to 6 per cent as a result of the takeover.

Morrisons' Every Day Low Pricing (EDLP) policy is clearly paying off. The TNS figures show a 14 per cent increase in sales in the same 12-week period for the Yorkshire-based retailer, lifting its market share from 6 to 6.4 per cent.

The country's top two retail groups also stretched their lead in the three-month period. Tesco, which is also increasingly price-driven, consolidated its number one position with a 10 per cent increase in sales, which lifted its market share to 26.9 per cent from 25.8 per cent.

Asda, meanwhile, also saw a 10 per cent increase in sales, giving the Wal-Mart subsidiary a 16.8 per cent market share, up 0.7 per cent.

Both companies improved at the expense of third placed Sainsbury, which has also struggled with a high-price image in recent years. Sainsbury's sales were down 1 per cent, according to TNS, pushing down its market share from 17.2 to 16.1 per cent - a figure which is almost level with the combined market share of Morrisons and Safeway, giving Sainsbury's already beleaguered management even further pause for thought.

As for the smaller supermarket group Somerfield, TNS said that it had shown a welcome return to sales growth (4 per cent during the period) as it began to get to grips with managing the Kwik Save discount store chain whose acquisition plunged it into a downward spiral for several years. Somerfield now has a market share of 5.5 per cent, the data showed.

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