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What's in store for consumers?

February 14, 2019

 

The maxim in retail – as in most other types of business – is that when times are good, growth equals acquisitions. When they're not so good; you get mergers.

 

This stems from the ethos that your aim should be to maintain and hopefully increase, market share regardless of whether the aim is surge or survival

 

The UK's grocery market is immensely competitive. Discounters such as Aldi and Lidl are managing to make it even more so for the big names. Their bottom-up influence on consumer patterns and supply chains is now considerable.

 

Sooner or later, say the analysts, matters will reach a tipping point for the larger players. Morrisons, was previously in the frame as heading for a fall although things have picked up recently.

 

Tesco has been through traumatic times. They reported a good Christmas but also announced plans to axe 1,700 jobs as part of a £1.5 billion cost-cutting initiative.

 

That leaves Sainsbury's and Asda. Both are bumping along to varying degrees at present but a surprisingly serious option under consideration is for the pair to merge UK operations.

 

This is a massive transformational step, and if allowed by the competition authorities, will dump Tesco from its top spot, at least in terms of combined turnover.

 

Some in the trade fear what could happen if US corporate behemoth Walmart, Asda’s owners, get a grip on a competitor. Others point out that Sainsbury’s are morphing into a stronger position, having acquired Argos and dropped Homebase.

 

Both will continue to keep their distinctive brands. So for the merger to go ahead, a likely condition is for the two retailers to sell a certain number of stores to competitors. It’s estimated that some 70 to 300 stores would be on offer.

 

This could well entice the likes of Aldi, whose combined turnover is more than £44 billion. Admittedly, that’s across Europe but that’s where the difference comes in.

 

The continental retail market, especially the food sector, is nowhere near as congested as its UK counterpart. Investment trends are longer term. Lidl is even opening its own customs operation.

 

Just how this proposal impacts on consumers is a bit fuzzy. With the prospect of competing brands not actually in competition, then it could get even fuzzier.

 

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Hearts and flowers likely to stay big business

 

Despite all the starry-eyed lover’s stuff about clandestine weddings and martyrdom, the historical evidence is that St Valentine’s Day actually stems from a Roman ritual where men whipped women with the bloody hides of animals they had just slain.

 

This was all consensual in the cause of fertility, apparently, and was by all accounts a raucous old time involving nudity and abandonment.

 

Sometime in the fifth century, the incumbent Pope decided that a restrained Christian stamp should be applied to proceedings with the putting on of some clothes and a bit less whipping.

 

 

 

As time went on, the occasion gained a romantic character, thanks to the writings of Chaucer and Shakespeare. Popularity increased throughout Britain and the rest of Europe with handmade paper cards becoming the tokens-du-jour.

 

Eventually, the tradition made its way to the New World just in time for the industrial revolution. By the beginning of the 20th century, mass-produced valentines saw romance re-exported back across the Atlantic.

 

Today, the occasion is big business, raising squillions in worldwide revenues for card-makers, florists, jewellers and the hospitality sector. And while that continues, we can be sure that this special day for romantics has a future – even if it's past is a bit dodgy.

 

 

 

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