Quote:
Originally Posted by pip08456
Is this a serious business propostion General?
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yup, I can assure you that Asda and Walmart don't bother doing anything unless it is making them £££ so just by the fact that they are having these talks means it is serious. Because everything is about £££ the decision is made before they even begin "discussing" something and by the time it ends up in the public eye it is a done deal. Even though they are "in advanced talks" I can guarantee it will go head because they wouldn't have gone to all this effort and expense (with the lawyers and financial accountants etc) if they didn't want it to happen.
In terms of stores your situation is interesting. In most cases Asda stores will close and Sainsburys will takeover because they are better suited and already fit for the future. I won't bore you with the detail but as one of the posts says above, Asda's product availability is rubbish and last time I checked the official stats they are the worst out of the big 4 supermarkets. They are in the process of rolling out a new system in stores which manages how they replenish stock and fill the shelves but Sainsburys has been using it for years and already has a streamlined process in place.
Sainsburys also have a different operating model. Because everything is about cost with Asda they try to cram as much as they can into as little space as possible. They prefer to keep aisle widths as tight as possible so they can squeeze additional aisles into any given shop space thus maximising the number of products they sell. They also keep the amount of space to any given product to a minimum so they can stock more products. The upside to this is smaller stores (despite how large some of them are) which means reduced building costs and land costs etc. The downside is labour costs because you have to have staff in during the day filling the shelves. Because the amount of space each product holds isn't sufficient for daily sales, if somebody didn't fill it up it would empty.
In contrast, Sainsburys do the opposite and build everything around having more than enough stock for any given product on the shelf so it doesn't sell out during the day which means the shelves only have to be filled once at night. This means larger stores of course but I imagine the initial investment with land mitigates the long term labour cost of day staff.
As an example, in my Asda everything on the frozen food department is on one row whether it be chips, vegetables or ice cream which means you are looking at 15-20 bags/boxes per product and they need to constantly fill it up to keep on top of demand. The frozen department in Sainsburys is more than twice as large and chips and vegetables are on 4 rows each to ensure they don't sell out during the day. Each of the lines of ice cream lollies or tubs (e.g. Carte Dor) have an entire shelf each which is 60+ tubs, some are over 100. The space is ridiculous and ensures they don't need to pay for anyone to work during the day and they only need to top it up at night.
Your situation is interesting Pip. If the Asda stores are in a better location compared to the Sainsburys I imagine the Sainsbury's will close completely and they will do a complete remodel of the Asda stores and convert them to Sainsburys spec. Either that or get rid of them all completely and build one or two larger purpose built stores from scratch but that is a lot of extra money and time with regards to planning permission etc but you may find that is the long term plan in certain areas to get the company where it needs to be to compete with Tesco long term.