Two stories dominate retail news in the weekend papers – Amazon’s shock swoop for Whole Foods Market on Friday and Sainsbury’s pursuit of Nisa.
”Now the UK supermarkets know Amazon is coming – probably. The biggest and most frightening beast in the retail jungle has signalled it is serious about the grocery business. Jeff Bezos’s monster is making its largest ever acquisition by paying $13.7bn to buy Whole Foods Market in the US.” (The Guardian)
“The jaw-dropping move stunned retail pundits, and shares in retailers ranging from Tesco to Walmart in the US were pummelled. The dramatic deal confirmed what had long been feared: Amazon was going on the offensive on the turf of traditional supermarkets.” (The Telegraph)
The audacious foray into the grocery market sparked a sharp sell-off at rivals, wiping £1.5billion from the value of Tesco, Sainsbury’s and Marks & Spencer as traders feared the internet giant was about to plough billions of pounds into the industry. (The Daily Mail)
The FT writes: “With its $13.7bn deal to buy Whole Foods Market, Amazon may finally have answered a question that has stumped executives in charge of its nascent groceries business. How can an online supermarket that has fewer customers than a provincial convenience store chain buy enough food to stock a virtual cornucopia?” (The Financial Times £)
Grocers have been caught off-guard by Amazon’s deal with Whole Foods, writes James Quinn in The Telegraph. “It couldn’t have come at a worse time [as] chairman John Allen, chief executive Dave Lewis and the rest of the Tesco board filed on to the stage at London’s Excel Centre for their annual outing with shareholders.” (The Telegraph)
Amazon’s takeover of Whole Foods is a “seminal moment in the great economic and technological transformation of our societies, and the markets know it”. Allister Heath in The Telegraph writes that even though Whole Foods is a tiny, non-mainstream player, shares of the world’s biggest retailers tumbled on both sides of the Atlantic.
The American deal will give encouragement to critics of Tesco who opposed its £3.7billion bid for Booker, the supplier of food and tobacco to Britain’s corner stores, writes Alex Brummer in The Daily Mail. “If Tesco wanted to be a next-generation grocer it might have been better off snapping up Ocado, which could have been bought for less than half the price of Booker and deploys the latest IT and robotics.”
The FT has a “deep dive” look at the deal, which is says “has myriad implications, assuming Amazon can close the deal. None more so than for the grocery sector where rivals of all shapes and sizes went tumbling after the transaction was announced”. (The Financial Times £)
The FT’s Lex colum says that despite President Trump’s threat to curb the power of Amazon, the deal is unlikely to face regulatory issues. “Eventually Amazon will be big enough to prompt Washington into action. It is ironic that despite his direct threat, it might not come from Mr Trump’s administration.” (The Financial Times £)
Sainsbury’s is closing in on a £130m deal to acquire the convenience chain Nisa as the industry rushes to consolidate following Tesco’s £3.7bn swoop on rival Booker, revealed The Guardian on Saturday. Industry sources suggest it is not a done deal yet from Sainsbury’s point of view because it is yet to carry out due diligence. (The Guardian)
The FT says Sainsbury’s has now entered “exclusive discussions to acquire the convenience store operator Nisa for £130m as the country’s largest supermarket chains continue to target the convenience sector” (The Financial Times £). The Telegraph adds: “The corner shop group Nisa is poised to sign an exclusivity agreement with the supermarket giant J Sainsbury which will temporarily bar the mutually owned group from courting other buyers.”
Sainsbury’s is closing in on a takeover of Nisa Retail, the member-owned convenience store group — but is set to face a rebellion from independent shopkeepers opposed to its demutualisation. Many of the 1,400 shopkeepers have blocked attempts to demutualise Nisa in the past, and the board’s decision has already caused a furore. (The Times £).
After details of offers for the business were put to members, some shopkeepers accused the Nisa board this weekend of marketing the retailer without their permission (The Times £).
Tesco reported its sixth consecutive quarter of growth in a tough market but had to work hard to appease small shareholders unhappy about executive pay at its annual meeting (The Times £). Tesco is avoiding passing on the full impact of price rises to consumers, the supermarket group has said, as it reported its best UK quarterly sales growth for seven years (The Guardian)
Bosses at Ocado will be urged to rebrand the online grocer in the City as a technology business and overhaul their investor relations team when they face an activist shareholder for the first time this month. (The Telegraph)
The rescue of the troubled Co-operative Bank could be scuppered by a row over its pension deficit. A clutch of hedge funds orchestrating a bailout of the lender are at loggerheads with the Co-op Group over guarantees of retirement benefits for workers (The Times £). The Co-op Group is locked in a stand-off this weekend with a consortium of hedge funds about a £200m pensions deal that would pave the way for a rescue of the mutual’s former banking arm (Sky News)
German discounters Aldi and Lidl are taking the fight to America, writes The Times (£). “Walmart has much to worry about. Lidl opened 20 stores on Thursday in South Carolina, North Carolina and Virginia. It plans to open 100 stores in the US by next summer as it enlarges its footprint on the east coast… Lidl’s impending arrival recently forced Aldi to turbocharge its expansion plan.”
Burgeoning online healthy eating business Musclefood will hit some of the UK’s major supermarkets after quietly reaching £100m in sales. (The Telegraph)
Fifty-seven per cent of global consumers buy or boycott products because of a brand’s stance on political or social issues, according to a new survey, a sign of growing pressure on companies to weigh in on hot-button topics from immigration and climate change to transgender rights and fake news (The Financial Times £)
With the world’s population expected to grow to almost 10bn by 2050, boosting the demand for food protein, a small but growing number of companies are turning to the potential of insects as a source of food and feed. (The Financial Times £)