German rivals cost us billions

Sainsbury’s and Asda plead with watchdog to clear £14bn merger

SAINSBURY’S and Asda have blamed Aldi and Lidl for the loss of ‘billions of pounds’ in sales over the past five years as the supermarkets prepare to join forces in a £14bn merger.

Almost two-thirds of householders shop at the budget retailers, up from just under half five years ago.

Their popularity has piled pressure on the Big Four supermarkets: Tesco, Sainsbury’s, Asda and Morrisons.

In a statement to the competition watchdog, which is investigating the merger, Sainsbury’s and Asda said the German discounters were cashing in thanks to their ‘convenient locations, high quality products and the lowest prices in the industry’.

The pair are trying to convince the Competition and Markets Authority that they will not have a stranglehold over the grocery market if they team up.

They argue they will continue to face competition from the German discounters and from new rivals such as Amazon. Their claim of billions in lost revenues comes as data from market researchers at Kantar Worldpanel showed Sainsbury’s sales fell 0.6pc in the 12 weeks to november 4, compared with a year ago.

Waitrose was the only other supermarket to post a drop in sales, down 1pc, the first time they have fallen since February 2009. Aldi and Lidl continued to storm ahead with sales growth of 15.5pc and 10.2pc respectively.

Aldi increased its market share by 0.9 percentage points to 7.6pc – the largest annual gain by any retailer in almost four years.

Asda, however, posted the biggest sales increase of the Big Four at 2.6pc, while Tesco was up 0.4pc and Morrisons was 1.5pc higher.

The merged Sainsbury’s and Asda group is promising lower prices for shoppers.

But a document submitted to the CMA by an unnamed supplier claimed the tie-up would be damaging for customers.

A spokesman for Sainsbury’s and Asda rejected this, saying: ‘Customers will be the big winners from the combination.’