Asda today discovered what hoops it needs to jump through to go ahead with its Netto deal.
The OFT wants Asda to sell off 47 of the stores it bought off Dansk Supermarked to allay its worries about “substantially reduced” competition.
Asda admits the number was “at the higher end of its expectations”. That’s probably a bit of an understatement, as the figure represents a quarter of the total estate for which Asda forked out a not-inconsiderable £778m.
But Asda will have entered into the deal with its eyes open. It’s upbeat about completing the sell-off sooner rather than later and is already talking to potential buyers.
There’s sure to be plenty of interest in the sites. Waitrose and now Morrisons are both on the hunt for smaller stores.
And while Asda may balk at the notion of selling to a competitor, it could find it has no choice. (Recall how the OFT obliged The Co-op to sell some of its Somerfield sites to food retailers.)
Thanks to the competition concerns, Asda has been forced to postpone the early stages of the changeover, meaning the first fascias won’t switch to its tasteful shade of lime green until the early months of next year.
Despite the complications, Asda will feel the deal was well worth the hassle. Every time Kantar figures show the supermarket losing market share, Asda cites how hard it has struggled to find new space. And adding around 150 stores to its current 374 is still verging on the transformational.
The retailer has outlined some of the changes we’ll see in these smaller stores – and also hinted at things that will stay the same, vowing, in what was presumably a dig at Tesco and Sainsbury’s, to keep prices the same in its smaller stores as elsewhere in the empire.
Assuming the OFT is kept onside, we’ll then see whether Asda, already buoyed by this week’s headline-grabbing revamp of own-label, can get back to the sort of growth it until recently took for granted.
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