How Asda and Sainsbury’s can grow after the merger
Ahead of the proposed deal, our CEO Sairah Ashman recently offered the retailers some tips in CityAM.
Let’s face it – no one really loves a merger apart from shareholders and the financial markets. Customers often fear choice reduction. Staff fear job losses. And in the case of Sainsbury’s and Asda, the supply chain will fear increased price pressure.
So what makes a successful merger? It’s a timely question given M&A activity is at an all-time high, partly driven by the weakened pound and low valuations for UK businesses (and that 70-90% end in failure).
Both Asda and Sainsbury’s have bold, dynamic, and fully-established brands; customers know what to expect when they walk into a store. Asda and Sainsbury’s therefore have a different kind of challenge to most brands post-merger, where a new brand is created (Dixons Retail + Carphone Warehouse = Dixons Carphone), or one swallows the other whole and the parent brand needs redefining (Morrisons + Safeway = Morrisons).
Bearing this in mind, and based on 25 years of working through similar situations, I’d advise any merger and integration team to consider the following.
Meeting of minds
Whilst many mergers are about market dominance, the best are a deeper meeting of minds. Think Microsoft and LinkedIn, or Disney and 21st Century Fox. Establishing common themes, cultures, styles of leadership and approaches to brand enables businesses to set foundations on which to build a common philosophy and customer proposition. It’s a chance to become more than the sum of your parts from the outset.
The future is now
It’s important for businesses to fight the urge to focus on short-term to-do lists and instead be radical. Ask ‘how big is our future?’ and work backwards from there. That’s the way Amazon’s been thinking, with diverse acquisitions from Whole Foods to Twitch. Being aligned to the direction of travel, and factoring in moments for measurement and analysis, helps ensure that transitional objectives evolve into mid- and long-term outcomes.
Many big mergers get called off last minute (remember Kraft Heinz and Unilever last year?), leaving both businesses suddenly behind their competition. This is often due to eyes on both sides focusing on internal ambitions and impending operational realities. What’s missing is external perspective. Keep an eye on global trends, bed these into the business, cultivate curiosity and, most of all, futureproof the new business.
Unite the clans
A new venture needs a strategy and narrative that works as a rallying cry for its new, combined workforce – even when the brands remain standalone. For Sainsbury’s and Asda, this should be relatively simple from a slogan perspective: Asda’s ‘Save Money. Live Better’ slogan speaks well to Sainsbury’s ‘Live Well For Less’, providing a cohesive narrative for the two to drive towards a united future.
Not every merger needs a radical brand overhaul, but as a business hones its story, decision-makers need to assess whether the name, visual expression and comms toolkit best represent what it wants to tell customers. A merger is a great opportunity to present a fresh take and identity to the world in a way that unites and connects.
Ultimately, every merger is unique, and they represent a major turning point for businesses that approach them in considered, nuanced and thoughtful ways. It’s a moment in time when you turn expectations on their head and do something bold. I’ll be interested to see how this latest deal fares, both as a shopper in my local Sainsbury’s and a curious brand expert.