The Grocer asks industry chiefs who their money is on to win the battle for Safeway and whether they believe the protracted sale has hurt the market over the past six months
Since January, the challenge for my colleagues and I has been to hold our company together. ‘Business as usual’ is very difficult to maintain in circumstances that are extremely unusual. But we’ve put a lot of effort into communicating with our people and keeping them motivated. We’ve also had great support from our suppliers. So we’ve been able to achieve solid trading results despite all the distractions.
The commission has followed a meticulously impartial process and we have done our best to assist it. I’m not going to speculate on the outcome. My main concern is that it should be known as soon as possible so that the current uncertainty can be resolved.
If you are asking me to take a punt, Asda Wal-Mart is in a very strong position.
We think the Competition Committee rules should be set so that if three or four people are cleared to bid and have to divest stores, the first option to purchase them should go to small companies like Booths. That would give an element of redress to small players.
I don't think the customer is going to notice any difference at all.
However, manufacturers will be dealing with fewer customers and in higher volumes. They will want to extract more value from our sector.
Whatever the outcome, it will strengthen supermarket groups. I don’t think who wins matters. If Tesco, Sainsbury or Asda win, they will be strengthened alongside whoever buys the stores that are sold off.
If Morrisons wins, it will create four majors and if no one is recommended, this leaves room for someone to come in and split Safeway up, which would again benefit the supermarkets.
The Competition Commission and the Office of Fair Trading must ensure there are safeguards for small stores built into the supermarket code of practice.
We would look for a ban on below-cost selling and transparency of pricing from manufacturers.
If there are no safeguards introduced, the stronger retail groups will demand more from manufacturers, who will be tempted to recoup their losses from the convenience sector.
Whatever the outcome, one thing is clear - there should be no kneejerk reaction by the government to introduce further and unnecessary regulation of the food retail sector. No one who works in the industry can possibly doubt that competition by retailers for the consumer equals a truly competitive environment.
Talk of additional controls on the sector is premature and unnecessary.
We need some sort of regulatory input to the industry. The view that the ‘free market’ and market forces generally creates competition is flawed. The only genuinely competitive market is one where consumers and suppliers have a choice. If 75% of the British public is forced to shop in one of four stores then that is not choice, no matter how it is dressed up.
I’m glad the Competition Commission has dealt with this seriously but hope that we don't have to wait until the next takeover before considering where we want to be as an industry. The process is harmful to the target and some of the bidders have suffered because of the management time and distraction involved.
Spar has grown despite the uneven playing field. It can’t be ignored that small businesses carry a disproportionate burden of red tape before they even get round to buying products in a competitive manner.
My initial reaction to the news that Safeway was for sale was not one of surprise because I had expected there to be more polarisation and it just happened to be Safeway that was on the radar. As a supplier, I would feel comfortable if Safeway and Morrisons joined forces. They are both good customers of ours and their trading styles are similar.
Safeway has done a good job to keep things moving and has reported good results in difficult trading circumstances. It has managed to keep its market share when the multiple grocery sector is having a tough time.
The final outcome for Safeway is hard to predict given the many twists and turns we have seen in the past nine months. The possibility of Asda, Tesco, Sainsbury or Morrisons acquiring Safeway outright has seemed unrealistic for some time but with the Competition Commission’s decision to review the bidding of all trade buyers based on local market shares, this may open up the opportunity for a complete takeover.
The long-term impact from a food manufacturer’s viewpoint will be the consolidation of the number of major players in the industry. When this occurs, there will be opportunities for suppliers to capitalise on sales and logistics efficiencies.
While the outcome for Safeway remains uncertain, one thing is for sure; this will not be the end of consolidation in the UK trade sector.
This inquiry must consider how the Safeway merger would affect small independent players. Pressure from out of town superstores is largely responsible for the closure of 25,000 stores since 1992.
It must also change the two-market definition. In 2000 the Competition Commission supermarket report divided the grocery market into ‘one-stop’ and ‘convenience’ stores. This is not a relevant definition for the current inquiry as consolidation affects the whole market. Nor should large multiples be able to acquire chains of convenience stores as Tesco did by arguing they only have a small share of the convenience market. The OFT referral of the Sainsbury’s hypothetical purchase of Somerfield stores was a welcome signal that the rules are changing. Now the regulators must make that signal a reality.
Carlos Criado-Perez, chief executive, Safeway
Edwin Booth, chairman, Booths
David Rae, chief executive, Association of Convenience Stores
Bill Moyes, director general, British Retail Consortium
Jerry Marwood, managing director, Spar UK
Christopher Carson, CEO Constellation Wines Europe
Joe Jimenez, president and CEO, Heinz Europe
Bill Grimsey, chief executive, The Big Food Group
Since January, the challenge for my colleagues and I has been to hold our company together. ‘Business as usual’ is very difficult to maintain in circumstances that are extremely unusual. But we’ve put a lot of effort into communicating with our people and keeping them motivated. We’ve also had great support from our suppliers. So we’ve been able to achieve solid trading results despite all the distractions.
The commission has followed a meticulously impartial process and we have done our best to assist it. I’m not going to speculate on the outcome. My main concern is that it should be known as soon as possible so that the current uncertainty can be resolved.
If you are asking me to take a punt, Asda Wal-Mart is in a very strong position.
We think the Competition Committee rules should be set so that if three or four people are cleared to bid and have to divest stores, the first option to purchase them should go to small companies like Booths. That would give an element of redress to small players.
I don't think the customer is going to notice any difference at all.
However, manufacturers will be dealing with fewer customers and in higher volumes. They will want to extract more value from our sector.
Whatever the outcome, it will strengthen supermarket groups. I don’t think who wins matters. If Tesco, Sainsbury or Asda win, they will be strengthened alongside whoever buys the stores that are sold off.
If Morrisons wins, it will create four majors and if no one is recommended, this leaves room for someone to come in and split Safeway up, which would again benefit the supermarkets.
The Competition Commission and the Office of Fair Trading must ensure there are safeguards for small stores built into the supermarket code of practice.
We would look for a ban on below-cost selling and transparency of pricing from manufacturers.
If there are no safeguards introduced, the stronger retail groups will demand more from manufacturers, who will be tempted to recoup their losses from the convenience sector.
Whatever the outcome, one thing is clear - there should be no kneejerk reaction by the government to introduce further and unnecessary regulation of the food retail sector. No one who works in the industry can possibly doubt that competition by retailers for the consumer equals a truly competitive environment.
Talk of additional controls on the sector is premature and unnecessary.
We need some sort of regulatory input to the industry. The view that the ‘free market’ and market forces generally creates competition is flawed. The only genuinely competitive market is one where consumers and suppliers have a choice. If 75% of the British public is forced to shop in one of four stores then that is not choice, no matter how it is dressed up.
I’m glad the Competition Commission has dealt with this seriously but hope that we don't have to wait until the next takeover before considering where we want to be as an industry. The process is harmful to the target and some of the bidders have suffered because of the management time and distraction involved.
Spar has grown despite the uneven playing field. It can’t be ignored that small businesses carry a disproportionate burden of red tape before they even get round to buying products in a competitive manner.
My initial reaction to the news that Safeway was for sale was not one of surprise because I had expected there to be more polarisation and it just happened to be Safeway that was on the radar. As a supplier, I would feel comfortable if Safeway and Morrisons joined forces. They are both good customers of ours and their trading styles are similar.
Safeway has done a good job to keep things moving and has reported good results in difficult trading circumstances. It has managed to keep its market share when the multiple grocery sector is having a tough time.
The final outcome for Safeway is hard to predict given the many twists and turns we have seen in the past nine months. The possibility of Asda, Tesco, Sainsbury or Morrisons acquiring Safeway outright has seemed unrealistic for some time but with the Competition Commission’s decision to review the bidding of all trade buyers based on local market shares, this may open up the opportunity for a complete takeover.
The long-term impact from a food manufacturer’s viewpoint will be the consolidation of the number of major players in the industry. When this occurs, there will be opportunities for suppliers to capitalise on sales and logistics efficiencies.
While the outcome for Safeway remains uncertain, one thing is for sure; this will not be the end of consolidation in the UK trade sector.
This inquiry must consider how the Safeway merger would affect small independent players. Pressure from out of town superstores is largely responsible for the closure of 25,000 stores since 1992.
It must also change the two-market definition. In 2000 the Competition Commission supermarket report divided the grocery market into ‘one-stop’ and ‘convenience’ stores. This is not a relevant definition for the current inquiry as consolidation affects the whole market. Nor should large multiples be able to acquire chains of convenience stores as Tesco did by arguing they only have a small share of the convenience market. The OFT referral of the Sainsbury’s hypothetical purchase of Somerfield stores was a welcome signal that the rules are changing. Now the regulators must make that signal a reality.
Carlos Criado-Perez, chief executive, Safeway
Edwin Booth, chairman, Booths
David Rae, chief executive, Association of Convenience Stores
Bill Moyes, director general, British Retail Consortium
Jerry Marwood, managing director, Spar UK
Christopher Carson, CEO Constellation Wines Europe
Joe Jimenez, president and CEO, Heinz Europe
Bill Grimsey, chief executive, The Big Food Group
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