Is 4bn Asda Price? Alleged interest into retailer B&M – Short Read

It’s been revealed that Asda is considering a move for the discount chain B&M, in its attempts to recuperate  its 11th successive quarter of declining sales. Replacing their Chief Exec last year, the fourth largest supermarket chain has had a challenging couple of years with the rise of the German competitors, Aldi and Lidl. (put in a Germany Penalty shootout joke here…)

What you might not be aware of; is this shift by many of the top supermarket giants to diversify it’s portfolio by pretty much buying their way out of competition. Look at Tesco’s attempting to snap up Booker for 3.7bn, or last year Sainsbury’s bought Argos for 1.4bn. 

Oh and you thought that wasn’t enough, Sainsbury’s are also looking to buy Nisa supermarkets in the region of 130m later this year.

Why why why?

Well the answer is simple and it comes back to that diversification. Asda positioned itself within the industry as the low budget, low cost cheaper supermarket, which if you remember a few years ago had a huge battle with Tesco and others on price. The German giants of Lidl and Aldi wanted a piece of that 99p pie, and have added to the scrum. Now, this has left Asda fighting off even more competitors than it planned, whereas the top 3 supermarkets left talking about quality assurance.

The likes of Poundland are now moving into clothing sales, B&M have doubled in size over the past five years with revenues growing 18% in the first quarter of 2017 (lol what?) and also owns 95 stores in Germany.

The idea behind the takeover is in an attempt to counter the latest battle cry by strong competition.

How this applies to YOU

We can take a few lessons from this short story as;

– Somethings gotta change’ 

As i mentioned up top, Asda has had declining sales for 11 consecutive quarters, something has got to change. By the sounds, it looks like it wants to reposition itself and use B&M for the discount angle and tap into that market. If something is declining, don’t watch it decline – act and change the game, change the playing field and think outside the box.

-you can’t be everything to everyone 

Take this one with a pinch of salt because they’re successful brands that can do this with marketing their products, however, you can’t be everything to everyone. In the retail sense, your USP has to be your quality, your experience or your cost. Asda positioned itself in the low budget low cost market and backfired due to strong competition. Stop trying to please everyone and focus on your strengths, make them really bloody good and buy in expertise for the other areas (B&M).

Now, bit of a caveat to the above, I know how much buying power, and influence Asda have and it might sound that I am being quite patronising to a global brand worth Billions. But the point is that the big fish need to think about what they are doing, reassess and go again.

Thoughts always welcome.

 

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