The past year have seen a string of M&A activity rock the FMCG and retail landscape. From Amazon’s acquisition of Whole Foods for 13.7 billion USD in August, to the more recent acquisition of Nisa by Co-op for 140 million GBP in May, the market has shifted seismically both offline and online.
But since its announcement on 28-April, all eyes are focused on the potential merger between Sainsbury’s and Asda. Breaking news today (23-May) also saw Tesco announce the closure of its Direct (non-food) site, which accordingly to Hitwise data, attracts 2.62 million visitors to their site (excluding Tesco Groceries, over a 4 week period).
News and speculation brings into question who will become the market leader in the UK. Using Hitwise data, we have modelled what a Sainsbury’s-Asda merger could look like for the Groceries sector, and how online market share, audience overlap and geographical spread would change as a result.
1. Sainsbury’s and Asda’s combined online audience would grow to be 44% greater than market leader, Tesco
In the four weeks to 12-May, Tesco attracted the largest number of unique users to their Groceries site, at 2.42 million, followed by Asda and Sainsbury’s. A merger between Player no. 2 and Player no. 3 would see a combined Asda and Sainsbury’s attract 3.48 million unique users, which is 44% greater than Tesco’s audience.
2. Sainsbury’s and Asda’s exclusive audience would also be 69% larger than Tesco’s exclusives.
Sainsbury’s and Asda’s exclusive audience (i.e. people who visited Sainsbury’s or Asda’s site, and not Tesco’s) would grow to 2.60 million unique users, over the four-week period. This would be 69% larger than Tesco’s exclusive audience (i.e. people who visited Tesco’s site, and not Sainsbury’s or Asda’s), with the greatest variance among regular shoppers of premium range products, wine and budget range products.
3. Morrisons would see 44% of their online audience also visiting Sainsbury’s or Asda
Looking at audience overlap, Tesco and Asda currently have the largest share of other supermarkets’ audiences. Over the four-week period, 30% of Sainsbury’s audience also visited Tesco’s site, and 33% of Morrisons’ also visited Asda’s site.
A merger would see Sainsbury’s and Asda receive the largest share of other supermarkets’ visitors. In particular, Morrisons would most be at risk, with 44% of their online audience also visiting either Sainsbury’s or Asda.
4. Out of the top UK cities, Leeds would have the greatest impact, with Sainsbury’s and Asda attracting 8.1% of the city’s online population
Morrisons also has a stronghold in Leeds, attracting 4.6% of the city’s online population. A merger would see Sainsbury’s and Asda draw the highest density in Leeds at 8.1%, compared to other top UK cities. In contrast, Sainsbury’s and Asda would have a lower density in London at 5.5%, but still posing a threat to Ocado, which has a higher reliance on their London audience.
What does this data tell us?
Media attention has been focused on the merger’s impact to the offline store network in the UK. Hitwise data shows that this merger would, as well, have an undeniable impact to the online FMCG landscape. Whether you are a supermarket, retailer or brand, take note.
Notes: Hitwise data looks at only the Groceries category for the top 5 supermarkets. The analysis is taken over the 4-week period to 12-May-2018.