How UK supermarkets will change as billionaires fight for control – from sales to workers
A battle for money rages on in Britain’s booming £ 200bn grocery market.
Supermarkets have been among the winners in pandemic lockdowns after panic buying and increased door-to-door deliveries.
It has not gone unnoticed by mega-rich financiers with an appetite for the wealthy forages.
Asda was first bought out, now Morrisons is the target of an attempted swoop by a US private equity firm.
At the same time, online giant Amazon is trying to grow with cashless stores, a “Russian Lidl” is planning a big expansion here, and tech companies are offering super-fast 10-minute deliveries.
Here we take a look at what’s going on, what it means for buyers, workers and the future of the industry.
Supermarkets were already wielding enormous power, and the coronavirus crisis gave them another big blow on the arm.
Industry experts IGD estimate that between 2019 and next year grocery sales will have jumped from £ 19bn to £ 211bn.
With non-essential stores closed for long periods of time, supermarkets were among those that could still open.
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But it’s online where grocers have really benefited.
IGD estimates their online sales will have jumped almost 60% between 2019 and 2022, when the internet will account for £ 1 in £ 11 spent on groceries.
But the evolution of purchasing habits heralds big changes.
Online shopping and more convenient shopping means fewer people are flocking to hypermarkets.
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This has left space for supermarkets to fill, which they are trying to do by leasing areas from other retailers.
The other big change is the unstoppable growth in discounts.
Aldi and Lidl increased their combined market share to 14%, with aggressive store opening plans.
Lidl on Thursday announced plans to open dozens of new stores as part of an expansion drive creating 2,000 more jobs.
Simon Wainwright, director of global analysis at IGD, said: “Retaining the shoppers who switched to them early in the pandemic will be the top priority for department store operators. “
Blackburn-born billionaire brothers Mohsin and Zuber Issa recently bought Asda for £ 6.8 billion.
But while the kings of the forecourt led the debt-fueled deal, they partnered up with a private equity firm.
Now another private equity firm, US firm Clayton, Dubilier & Rice, has made a £ 5.5bn offer for Morrisons.
The Bradford-based chain has rejected the offer for now, but experts believe it could spark a bidding war. Sainsbury’s is also considered vulnerable to a takeover.
Billionaire Daniel Kretinsky, known as the Czech Sphinx, has racked up an almost 10% stake in Britain’s second-largest supermarket, though his intentions remain unclear at this time.
There will be both winners and losers among the rapidly changing food industry workforce.
Department stores are still essential, but chains are also doubling their sales in small branches and online.
Growth in internet sales could also mean more jobs in warehouses or picking orders in stores.
Meanwhile, the Usdaw traders union has expressed concern about Amazon and Tesco’s cashier-less stores.
Pauline Foulkes of the union said: “Too often retailers are dazzled by new technologies, looking for solutions to problems that do not exist.
“Usdaw believes employers should invest in people.
“Well-paid shop workers in secure, valued and respected jobs are best for business.
“We don’t want to see jobs cut off by the introduction of new technology.
New ways to shop
Online Behemoth Amazon realized that there was money to be made in real stores too.
He opened two cashless stores in London.
Cameras and sensors track what shoppers pack, and a computer bills them later.
Tesco is set to open its own trial store based on the same idea.
While not that drastic, another change in the works is a new channel dubbed the ‘Russian Lidl’.
Mere displays food on pallets to save time and money, with only about eight employees per store. He wants to open hundreds of branches here.
But why even go out or wait for your online store to arrive?
The Turkish brand Getir offers a range of 1,500 products that arrive – usually by moped – within 10 minutes of ordering.
The big players are also getting involved in the super-fast delivery sector.
One thing families can be assured of in the coming months is choice.
Not only will there be more stores to shop for groceries, but online offerings are expected to grow as well.
This increased competition should, in theory, mean good news when it comes to pricing.
This is one of the reasons why, when headline inflation is above 2%, there is always deflation (falling prices from year to year) on food.
Grocery market share
Tesco – 27.1%
Sainsbury’s – 15.2%
Asda – 14.1%
Morrisons – 10.1%
Aldi – 8.2%
Cooperative – 6.3%
Lidl – 6.1%
Waitrose – 5%
Iceland – 2.3%
Ocado – 1.8%