Mergers: The Market Share

Sainsbury's bid for Asda is perhaps naïve in its optimism

You would have thought the Morrisons deal for Safeway more than 10 years ago would have put paid to analysts and investors wanting another supermarket bid. It caused massive upheaval in systems, in logistics, in stock - indeed, there was almost nothing which was not disrupted. The disruption even applied to the company's eponymous founder, Ken Morrison, who was eventually forced to step down. The combined group took five years to right itself.

It is true that some things Morrisons brought about themselves. Much of what was good in Safeway was unceremoniously binned. They then spent several years trying to make things work and, when they did not, had to reinvent the old processes. Essentially, it was just too big.

Sainsbury's bid for Asda may be a different story, but it has a lot of similarities. Sainsbury's has predominantly focused on the south; Asda is headquartered in the north. Sainsbury's is historically upmarket; Asda is historically more downmarket. Sainsbury's was predominantly food...