The Courier & Advertiser (Perth and Perthshire Edition)
Consolidation in retail sector
Brexit is helping drive a fresh wave of UK takeovers in the retail sector as supermarkets consider deals that will help avoid price hikes amid surging inflation.
Industry veteran and former Waitrose managing director Steven Esom said retailers were turning to mergers and acquisitions (M&A) in a bid to control costs and maintain market share.
“Any business looking at their cost base can see the advantage of consolidation,” Mr Esom said.
“People are looking at making their businesses more efficient and clearly any type of inflation passing through – that’s got be mitigated.
“So I would think businesses are doing this to mitigate the effects of inflation.”
His comments come amid a flurry of M&A activity in the supermarket sector, with Tesco attempting a £3.7 billion merger with Booker.
A tilt by Sainsbury’s to acquire Nisa is also thought to be on the cards, while reports emerged earlier this summer that Walmart-owned Asda was exploring a £4.4bn takeover of discount retailer B&M.
“Businesses are now looking at every way of increasing volumes to mitigate costs,” Mr Esom said.
Since the Brexit vote triggered the pound’s collapse, retailers have been grappling with a double whammy of rising import costs for goods and rapidly deteriorating consumer confidence.