{"id":795984,"date":"2026-10-08T13:56:13","date_gmt":"2026-10-08T13:56:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/795984\/"},"modified":"2026-10-08T13:56:13","modified_gmt":"2026-10-08T13:56:13","slug":"supermarket-shake-up-why-asda-or-morrisons-could-vanish-within-a-decade-supermarkets","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/795984\/","title":{"rendered":"Supermarket shake-up: why Asda or Morrisons could vanish within a decade | Supermarkets"},"content":{"rendered":"

They may be two of the most recognisable brands in Britain, with a combined 188 years serving shoppers, but industry watchers agree that either Asda or Morrisons<\/a> \u2013 or both \u2013 could disappear within a decade.<\/p>\n

This week, it emerged that Sainsbury\u2019s and Morrisons \u2013 the UK\u2019s second- and sixth-largest supermarket chains \u2013 had held merger talks<\/a> between last November and February, before the larger player decided to walk away.<\/p>\n

News of the potential deal has relaunched speculation that the UK grocery market is now ripe for consolidation and revealed that the Sainsbury\u2019s boss, Simon Roberts \u2013 who has been in post for six years \u2013 is at least willing to consider the possibility of buying one of his troubled rivals.<\/p>\n

Sainsbury\u2019s, which has 600 supermarkets and almost 900 convenience stores, has until recently been seen as wary of trying to revive merger talks with its rivals after its bid to buy Asda for \u00a37bn in 2019 was blocked<\/a>.<\/p>\n

However, industry experts say Asda<\/a> and Morrisons\u2019 owners have held informal talks with each other \u2013 and both with Sainsbury\u2019s team \u2013 and predict that talks could restart.<\/p>\n

\u201cThe three of them, one way or another, are talking to each other,\u201d one said. He suggested that a combination of Asda and Morrisons could happen but was likely to be a weaker deal than a Sainsbury\u2019s takeover of either, as both businesses struggle with costs and interest on debt piles.<\/p>\n

Competition fears ease<\/p>\n

The industry has undergone significant change since the collapse of the Sainsbury\u2019s-Asda deal. While riding the wider retail trends towards online shopping and convenience stores, the supermarket groups have been jockeying for market share.<\/p>\n

Aldi is poised to overtake Asda to become the UK\u2019s third-largest supermarket, with less than 1 percentage point separating them. Aldi is rapidly opening stores while Asda has struggled to find growth since a \u00a36.8bn, debt-fuelled takeover<\/a> in 2020 and heavy price competition from the discounters and from its bigger rivals Tesco and Sainsbury\u2019s.<\/p>\n

Aldi is poised to overtake Asda to become the UK\u2019s third-largest supermarket. Photograph: Jason Cairnduff\/Reuters<\/p>\n

Another big change could emerge this month when the UK\u2019s competition watchdog is due to publish its final ruling on whether Aldi and Lidl should now officially be classified as \u201clarge grocery retailers\u201d like Tesco<\/a>, Sainsbury\u2019s, Asda and Morrisons.<\/p>\n

In August, the Competition and Markets Authority<\/a> (CMA) said it had found provisionally that Aldi and Lidl no longer qualified as \u201climited assortment discounters\u201d as they now carry a \u201cfull range\u201d of groceries and operate stores larger than 1,000 sq m (10,700 sq ft) across the UK.<\/p>\n

The change means the German-owned discounters are now taken into account when assessing competition in different locations.<\/p>\n

This is the strongest hint yet that the CMA has changed its stance blocking the Sainsbury\u2019s buyout of Asda on the basis that shoppers would be worse off.<\/p>\n

It also indicates that the CMA\u2019s \u201cbalance of competition\u201d \u2013 its estimation of the impact of a deal based on drive times for customers around stores \u2013 has shifted, meaning Sainsbury\u2019s might have to dispose of dozens fewer stores to gain regulatory clearance for a merger. A figure of 150 was suggested when it tried to buy Asda.<\/p>\n

Clive Black, an analyst at Shore Capital and Sainsbury\u2019s broker, says the CMA preliminary ruling indicates \u201cthe shape of the pitch has adjusted a little\u201d and \u201cthe change encourages another chapter of consolidation\u201d.<\/p>\n

It is a step-change from 2019 when analysts accused the singing<\/a> former Sainsbury\u2019s boss Mike Coupe and his board of directors of \u201carrogance\u201d and \u201cfolly\u201d for pursuing Asda. Now they say that consolidation is almost inevitable.<\/p>\n

That comes amid what is seen as a more welcoming regulatory environment backed by the UK government\u2019s growth agenda combined with the appointment<\/a> of Doug Gurr, a grocery industry veteran who has spent time at Asda and Amazon, to lead the CMA.<\/p>\n

Sainsbury\u2019s holds the cards<\/p>\n

One analyst described Sainsbury\u2019s as the \u201ckingmaker\u201d in any industry consolidation as it uniquely has the resources to snap up a rival without the market dominance to immediately prevent any deal.<\/p>\n

Analysts agree it is unlikely to face significant competition if it opts to buy Morrisons or Asda \u2013 Tesco is too big to buy a rival<\/a>, while Marks & Spencer and Waitrose appear unlikely to have the financial firepower or desire to pursue such a deal.<\/p>\n

Amazon should not be ruled out as a player in consolidation, according to one analyst, who said the online specialist might be prompted into action by any of the supermarkets announcing plans to merge.<\/p>\n

Amazon\u2019s foray into the grocery business didn\u2019t go well and it shut<\/a> all 19 of its Fresh stores. Photograph: Zuma Press\/Alamy<\/p>\n

\u201cThe last cards are coming on to the table,\u201d he said, suggesting that Amazon might consider buying Asda, Morrisons or even Sainsbury\u2019s, now that it had effectively disposed of Argos which may have caused competition concerns for Amazon.<\/p>\n

However, Amazon has not fared well with its dip into high street retail. Last year, it decided to close<\/a> all 19 of its Fresh stores, with plans to convert five of them into shops under its Whole Foods Market brand.<\/p>\n

As analysts at Bernstein put it: \u201cWe believe that scale is the most important source of advantage in grocery retail, and the combined market share of Sainsbury\u2019s and Morrisons would improve Sainsbury\u2019s ability to take on Tesco.\u201d<\/p>\n

The logic of a deal for Morrisons\u2019 American private equity owner is clear. Clayton, Dubilier & Rice has few options for an exit, four years on from its \u00a37bn acquisition of the Bradford-based chain. Private equity<\/a> bidders are not likely to be lining up, as there is little room for a another debt-fuelled buyout, while pursuing a stock market flotation would require a compelling growth story to lure investors but which is now absent.<\/p>\n

The heavy debts taken on to fund CD&R\u2019s acquisition in 2022 have left Morrisons struggling to compete as interest rates have risen, pushing up costs, while competition has toughened as pinched households look to save costs on their grocery bill.<\/p>\n

Clearly, the CD&R adviser and former Tesco boss Terry Leahy is unlikely to let Morrisons go cheaply \u2013 with price demands ultimately understood to have led Sainsbury\u2019s Roberts to walk away from any deal.<\/p>\n

However, Morrisons has fallen back<\/a> to be the UK\u2019s sixth-largest supermarket with an 8.4% market share, just behind Lidl on 8.7%, according to the latest data from the industry analysts Worldpanel by Numerator.<\/p>\n

A \u2018sweetheart deal\u2019<\/p>\n

Asda\u2019s owners, led by the British investment firm TDR Capital, may also welcome a tidy exit although they are likely to be happier to wait, having largely made their money selling off various parts of the grocer\u2019s assets, industry insiders say. Under the returning boss, Allan Leighton, there are nascent signs of a turnaround<\/a> if the owners are willing to sit tight and he does not appear keen<\/a> on reviving talks with Sainsbury\u2019s.<\/p>\n

For Sainsbury\u2019s, the appeal is cost-savings derived from larger scale. The combination of Sainsbury\u2019s and Morrisons would hold 23.6% of the UK market and add 500 supermarkets and 1,600 convenience stores to its portfolio \u2013 taking it closer to Tesco\u2019s 27.8% market share. Buying Asda would take it to about 26.7%.<\/p>\n

Any motivation for Sainsbury\u2019s comes from the potential cost-savings that a scaled-up merger would bring. Photograph: Bloomberg\/Getty<\/p>\n

One industry expert said a combination with Asda was the \u201csweetheart deal\u201d because it would not only bring larger scale but involve fewer stores serving the same customers in the south of the country.<\/p>\n

The main benefit of any deal would come from cost-savings garnered from combining central operations, such as buying and property management, and aligning supplier terms.<\/p>\n

Asda\u2019s bigger supply chain brings greater potential savings and it is arguably a less complicated acquisition than Morrisons, which operates a large food processing business which Sainsbury\u2019s would probably want to dispose of to a variety of specialist suppliers.<\/p>\n

One issue is that businesses cannot seek pre-approval for a deal from the CMA, so launching a formal takeover offer for either Morrisons or Asda would involve an element of risk \u2013 consuming management time, and costly fees for bankers and lawyers.<\/p>\n

As one industry expert says, \u201cthe critical argument is the role of the discounters\u201d and the CMA\u2019s rulings do not always follow the expected path. \u201cIt\u2019s a lottery,\u201d he said.<\/p>\n

Analysts at Bernstein also say that \u201cdespite the benefits of a possible deal, the risk of distraction for Sainsbury\u2019s would be high\u201d.<\/p>\n

The industry insider says: \u201cSainsbury\u2019s is best served by being patient\u201d as Asda and Morrisons are likely to continue to struggle. \u201cThere comes a point when the CMA has no choice but to let something happen as [Asda and Morrisons] can\u2019t compete. You could argue that is already the case.\u201d<\/p>\n

This article was amended on 8 October 2026. An earlier version said that Sainsbury\u2019s is unlikely to face significant competition if it opts to buy \u201cSainsbury\u2019s or Asda\u201d; that should have said Morrisons or Asda.<\/p>\n","protected":false},"excerpt":{"rendered":"They may be two of the most recognisable brands in Britain, with a combined 188 years serving shoppers,…\n","protected":false},"author":2,"featured_media":795985,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[84,59,56,54,55],"class_list":["post-795984","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-gb","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/795984","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=795984"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/795984\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/795985"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=795984"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=795984"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=795984"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}