X

Subscribe to our newsletter

Enter your email address here if you wish to receive our newsletter, factsheet and company information alerts.

We respect your privacy and do not sell, rent or loan any information collected on this site and your data will not be used in ways to which you have not consented.

You can unsubscribe at any time by clicking on the unsubscribe link on any email we send you.

17/05/20182 mins

Transatlantic Weddings

It’s royal wedding week. But with Meghan Markle and Prince Harry hogging the headlines, another important transatlantic match-up is getting less media coverage.

This less-heralded union is taking place in the competitive food-retail landscape, with Sainsbury’s agreeing to buy Asda from its present owner, US retail titan Walmart.

An invitation to Meghan and Harry’s wedding is probably the world’s hottest ticket right now. And royal weddings are always a big hit with consumers. But we’ve yet to see how consumers will be affected by the Sainsbury’s/Asda tie-up. Will some local branches be closed or restructured? As lots of Sainsbury’s and Asda stores are close to each other, the deal could result in less choice for consumers.

Royal weddings are great for suppliers – from premium marketers to budget retailers, all offering commemorative products. Businesses in the UK and beyond are celebrating hearty sales as Windsor gears up for the big day.

The wedding is also likely to have a positive impact on tourism. With the pound attractively valued, widespread media coverage is essentially free advertising for the UK as a holiday destination – especially if the sun shines. Prince William and Kate Middleton’s wedding provided a sizeable shot in the arm for tourism in 2011, with 800,000 more visitors than in 2010, according to the data from the Office of National Statistics. Meghan and Harry’s nuptials could have a similar effect.

Suppliers to Sainsbury’s and Asda, on the other hand, are almost certain to face an adverse impact. Crooning Mike Coupe, CEO of Sainsbury’s, has pledged to cut the prices of everyday products by around 10% – which would certainly leave customers ‘in the money.’ But the Competitions and Markets Authority (CMA) is expected to examine the deal’s impact as a matter of urgency.

Subject to a CMA review, the companies expect the deal to go through by the second half of 2019. If it does go ahead, the combined entity will become a major competitor to market leader Tesco. Although this could threaten Tesco’s dominance, the consolidation is likely to benefit the supermarket sector as a whole.

Twenty years ago, who would have expected a union between a British prince and a divorced American actress? Similarly, few could have foreseen a situation where Sainsbury’s, a venerable family firm, would be allowed to purchase Asda. Both are timely reminders that nothing is permanent except change.

 

Please remember that past performance may not be repeated and is not a guide for future performance. The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations. You may not get back the amount you invest.

Please note that SIT Savings Ltd is not authorised to provide advice to individual investors and nothing in this promotion should be considered to be or relied upon as constituting investment advice. If you are unsure about the suitability of an investment, you should contact your financial advisor.

Subscribe to our newsletter

Enter your email address here if you wish to receive our newsletter, factsheet and company information alerts.

We respect your privacy and do not sell, rent or loan any information collected on this site and your data will not be used in ways to which you have not consented.

You can unsubscribe at any time by clicking on the unsubscribe link on any email we send you.