Sainsbury's responds to supplier concerns

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Ed Leahy

BY ED LEAHY

Sainsbury's responds to supplier concerns

Following its mega-merger with Asda, Britain's second largest retailer said it hopes to harmonise prices with the biggest suppliers

Sainsbury's responds to supplier concerns

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Sainsbury’s has responded to concerns about how their merger will affect suppliers, stating they will both benefit from the deal.

The retailer stated it aims to harmonise prices with their suppliers, the majority of whom are “large, multi-national companies who operate on significantly higher profit margins than supermarkets do”.

They reiterated their intention to lower prices in store by 10 per cent, with suppliers having the opportunity to streamline their supply chains and develop their product line.

The statement came shortly before Sainsbury's CEO Mike Coupe and Asda's Roger Burnley were summoned by the Environment, Food and Rural Affairs select committment to discuss the merger. Committee chair Neil Parish MP has repeated his concerns on how the move could "squeeze those further down the supply chain".

In a written piece on the merger, Sainsbury's revealed: “A significant proportion of the synergies we expect to achieve from the combination of Sainsbury’s and Asda will come from the harmonisation of pricing from these large suppliers,” the company stated.

“In effect, enabling both our businesses to benefit from the lower prices already being offered to either Sainsbury’s or Asda. By doing this, we will be able to lower the cost of living for millions of our customers, aiming to reduce prices on essential items by around 10 per cent.”

Sainsbury’s recalled its history of building up small brands, including Ella’s Kitchen, Reggae Reggae Sauce and Tyrells, as well as collaborative relationships with farmers and growers through Sainsbury’s Development Groups.

“We have a strong track record of working collaboratively and forging good relations with all our suppliers and we look forward to continuing to work with all our suppliers in this new retail landscape. A combined Sainsbury’s and Asda, creating a strong, dynamic business of scale will present opportunities to both large and small suppliers to grow their businesses as we grow ours.”

The merger came as a surprise to the British food industry, with both retailers operating different segments of the market. The details of the merger are not yet known, although both brands will continue as they are, with Sainsbury's CEO Mike Coupe taking the helm.

The only hurdle remaining for the deal is the Competition and Markets Authority, who formally opened their review into the merger, and could block it, if they deem it anti-competitive.

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