>>The commission’s decision will set new rules for store portfolios
As the industry awaits with bated breath for the Competition Commission’s report into Safeway to be published, what I find so intriguing is not the debate about who will be allowed to bid (Morrisons has always been the clear favourite), rather, it is trying to understand how the market will be reshaped once the deal is done.
Even if Sir Ken gets the green light to bid, he will have to sell a sizeable chunk of stores - some think as many as 50. With good sites hard to come by, this could yet prove to be an invaluable prize for other retailers - depending how the Competition Commission tries to regulate the sale of these stores.
The Commission’s views on this issue will have implications that stretch way beyond the need to tidy up after the Safeway auction process is complete. Think about it. If the Commission sets out a clear framework as to what is or is not acceptable, either on a national or a local basis, then the multiples could in theory apply those criteria when deciding whether to try to buy other parcels of stores. For those eager to do deals, the OFT has muddied the waters with its decisions to look at Tesco’s acquisition of a Co-op store in Slough and examine Sainsbury’s interest in Somerfield.
But in grocery retailing anything is now possible, and in recent weeks I have heard plenty of talk about who will do what and with whom as the multiples prepare for life in a post-Safeway world. Not all the rumours are far-fetched. Sainsbury’s hypothetical Somerfield deal shows how keen it is to reshape its portfolio. And, as you will have read in our opening news pages, Sir Peter has again talked about whether Sainsbury should try to stretch its brand to fit the existing portfolio or whether it should change the portfolio to meet the strength of its brand.
Sainsbury is not alone. Does Somerfield really want to “downsize” 50 stores, as announced in July, or was it effectively putting them up for sale? What about those Safeway convenience stores that Morrisons has already said it wants to run separately? Tesco was believed to have cast its eye over a parcel of smaller Safeway stores at the beginning of the year. Would it bid? Could it bid? And will Marks and Spencer get on the acquisition trail?
Out of all this speculation we may yet see some serious horsetrading between the big retailers in the months ahead - but only if the Commission sends the right signals in its report.
how the map will change
As the industry awaits with bated breath for the Competition Commission’s report into Safeway to be published, what I find so intriguing is not the debate about who will be allowed to bid (Morrisons has always been the clear favourite), rather, it is trying to understand how the market will be reshaped once the deal is done.
Even if Sir Ken gets the green light to bid, he will have to sell a sizeable chunk of stores - some think as many as 50. With good sites hard to come by, this could yet prove to be an invaluable prize for other retailers - depending how the Competition Commission tries to regulate the sale of these stores.
The Commission’s views on this issue will have implications that stretch way beyond the need to tidy up after the Safeway auction process is complete. Think about it. If the Commission sets out a clear framework as to what is or is not acceptable, either on a national or a local basis, then the multiples could in theory apply those criteria when deciding whether to try to buy other parcels of stores. For those eager to do deals, the OFT has muddied the waters with its decisions to look at Tesco’s acquisition of a Co-op store in Slough and examine Sainsbury’s interest in Somerfield.
But in grocery retailing anything is now possible, and in recent weeks I have heard plenty of talk about who will do what and with whom as the multiples prepare for life in a post-Safeway world. Not all the rumours are far-fetched. Sainsbury’s hypothetical Somerfield deal shows how keen it is to reshape its portfolio. And, as you will have read in our opening news pages, Sir Peter has again talked about whether Sainsbury should try to stretch its brand to fit the existing portfolio or whether it should change the portfolio to meet the strength of its brand.
Sainsbury is not alone. Does Somerfield really want to “downsize” 50 stores, as announced in July, or was it effectively putting them up for sale? What about those Safeway convenience stores that Morrisons has already said it wants to run separately? Tesco was believed to have cast its eye over a parcel of smaller Safeway stores at the beginning of the year. Would it bid? Could it bid? And will Marks and Spencer get on the acquisition trail?
Out of all this speculation we may yet see some serious horsetrading between the big retailers in the months ahead - but only if the Commission sends the right signals in its report.
how the map will change
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