UK supermarkets are holding major merger talks — what does this mean for shoppers?

Are supermarkets in the UK going to merge? (Picture: Getty Images) By now, you’ve likely heard that Sainsbury’s and Morrisons held consolidation talks earlier this year. The talks didn’t go anywhere, but they’ve caused a bit of a stir in the retail industry. And now, with the news that Tesco is looking to buy Majestic Wine, we can’t help but wonder what major supermarket mergers might mean for shoppers across the UK. Metro put the question to experts to get their thoughts on the matter. Here’s what they had to say… Sainsbury’s and Morrisons held failed merger talks earlier this year (Picture: Nathan Stirk/Getty Images) Are more supermarkets going to merge? Sarah Johnson, the founder of Flourish Retail, thinks it’s likely we’ll see more consolidation conversations in the future. ‘They’ll mostly involve the mid-market supermarkets,’ she predicts. ‘Aldi and Lidl have a clear point of difference on price, and at the premium end, Waitrose and M&S win on quality and experience. ‘The supermarkets in the middle are getting squeezed because they can’t compete as effectively on either. A merger is a way of buying market share when you can’t easily win it.’ Tesco is currently in the running to buy Majestic Wine (Picture: In Pictures via Getty Images) Why would supermarkets want to merge? As Sarah pointed out, a merger is a way to give a business more ‘buying power’. Having this means the retailer could negotiate harder with suppliers and bring prices down. Ask Metro Use AI to go deeper into the stories you care about – powered by Metro and trusted publications. She continues: ‘It can also streamline logistics and overheads, so the cost of running the business falls. ‘Margins in grocery are very tight, so even small savings per product add up quickly, so that’s the business case. The harder question is whether shoppers would actually benefit from a merger. Which UK supermarket is your favourite? What would these changes mean for shoppers? Alex Rowberry, Senior Insight Analyst at the Institute of Grocery Distribution (IGD), tells Metro that while consolidation ‘would not automatically mean lower prices’, there is a chance it could help limit price increases. Operating on a greater scale could allow retailers to better manage rising costs, so they wouldn’t need to constantly hike prices. ‘The outcome would depend on the nature of the deal and how effectively the businesses were integrated,’ he says. While this sounds positive, Sarah says there could be downsides for customers, such as the loss of some local supermarkets. In an area where the two merged retailers had stores close by, the company could simply decide they no longer need to operate both supermarkets. ‘For a shopper, that could mean a longer trip, fewer options nearby, and less reason for the remaining store to compete hard on price,’ she says. Retail experts say consolidation in the industry could impact supermarket prices (Picture: Getty Images) As well as losing stores, shoppers could also see some of their favourite products disappear from the supermarket. ‘When retailers combine, they rationalise what’s on the shelf, which often means less choice, and smaller brands and suppliers can get squeezed out if someone else is doing the same job.’ While this is all food for thought, experts don’t think there’s urgent need to worry about consolidation talks. Alex agrees with Sarah that it’s ‘possible’ that we’ll see further consolidation in the grocery retail sector, but adds that it’s a very complex process that would take a lot of time and face intense scrutiny. So, safe to say, we certainly won’t be seeing any quick changes any time soon. Do you have a story you’d like to share? Get in touch by emailing MetroLifestyleTeam@metro.co.uk Arrow MORE: 60 people went to Tesco to get a meal deal together and it’s adorable Arrow MORE: 6 ways to eat a balanced diet as fruit and vegetables lose their nutritional value Arrow MORE: M&S’s iconic treat from the 90s that shoppers are desperate to eat