Black rock increased stack to 5%Looking for Bidding drama DYOR |
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Sainsbury's is now one of the most shorted stocks on the LSE
6.3%
Even higher than Ocado, which I regard as the most overvalued stock on the LSE |
I agree with having UK International champions to take on the rest of the world, however not so much when it comes to the UK domestic market. |
Ppl tout about uk plc champion and when they have one they complain. |
 Asda launches supermarket price war and sparks £4bn sell-off of Britain's listed grocers
More than £4billion has been wiped off the value of Britain’s listed grocers after Asda launched a supermarket price war.
Shares in Tesco, Sainsbury’s and Marks & Spencer slid as speculation mounted that they will be forced to keep prices low to stop customers flocking back to Asda.
The sell-off – which started on Friday and continued yesterday – came after Asda’s executive chairman Allan Leighton said he will spend millions in a bid to turn the company around.
Tesco shares have fallen 13 per cent in the past two sessions – reducing its value by £3.2billion. Sainsbury’s, Britian’s second largest supermarket behind Tesco, has lost £540million, or 9 per cent.
And M&S shares are also down 9 per cent since Friday – knocking £660million off its market value. It means the trio has lost £4.4billion in just two days of trading. Asda, however, is owned by private equity and is not listed on the stock market.
‘Shareholders are expecting a period of intense competition, which is likely to hit profits, especially as it coincides with upcoming payroll cost increases,’ said Susannah Streeter, head of money and markets at broker Hargreaves Lansdown.
Mail Business |
One of the biggest problems is Tesco has too higher UK grocery market share.
When looking at the Republic of Ireland the number one market share has 24.4%, while number two which is Tesco has 23.9%, only 0.5% market share difference while the number 3 has 20.4% all three with a higher share then Sainsbury's does in the UK.
As for France the number one market share has 24.4%, number 2 has 21.6% and the number 3 with 17.1% again all three with a higher grocery market share then the number two Sainsbury's has here in the UK.
As I've posted several times before, if I was the regulator in the UK I would force Tesco to reduce their market share by 5%, especially in the areas of the UK where Tesco has 35% or more of the market share. This would still leave them with over 23% UK grocery market share, |
ASDA - Asda has reinforced its value-driven strategy by expanding Rollback to 25% of its product range, offering an average 25% price reduction across 4,000 key items. This move has re-established Asda as the most competitively priced traditional supermarket.
Executive Chairman Allan Leighton emphasised Asda’s commitment to regaining customer trust and enhancing the shopping experience through ongoing price investments. As Asda progresses through 2025, its price-led strategy, digital transformation, and £43mln store refurbishment (store refurbishment same a Sainsbury's strategy) are expected to drive sustainable growth, solidifying its competitive position in the UK grocery sector. |
Sainsbury’s CEO confident amid intensifying competition:
Despite ongoing challenges from rising costs, he remains optimistic, emphasising the retailer’s expansion efforts, store refurbishments, and personalised offers through the Nectar app as key to staying competitive.
As a supermarket shopper I disagree about the personalised offers as they will make no difference to where I shop and what I buy. As for store refurbishments often they are a bloody nuisance as after refurbishment difficult to find the items I am shopping for. |
Most the instore Argos I see are right at the back of the supermarket and often not noticeable when first walking in.
Argos tends to be for the D's and E's while Sainsbury's customers tend to be the C1's and 2s who are the ones who go into the supermarket therefore there is not much of a cross over of customer base.
In the past 15 years I've only bought 1 thing from Argos. Before the only thing I use to buy and was on a regular basis was Konica, 200speed, 36 picture film which came in packs of 5 were half the price of the local camera shop. On average I would buy 20 packs of 5 a year from Argos. |
I live near Beaconsfield in Bucks Logan, they have just the 1 member of staff now in what is a big store. Amazon Prime has dented the business model for sure. Price and convenience are king! |
The drop is well overdone in my opinion. |
I don't disagree Logan but the optics of pulling out of the home delivery would be awful for any major supermarket. Imagine the joy in their competitors marketing department thinking up straplines to take advantage of that strategic move. |
My local Tesco now has 12 delivery vans and 14 drivers on their books + the numerous staff who have to go round the store to take the groceries off the shelves for the home-delivery.
These 12 vans require maintenance, road tax, insurance and a ton load of fuel. |
Not exactly as 60% of the offer for Argos was paid for in newly issued Sainsbury's shares = 12% of Sainsbury's. The other 40%, £440mln Sainsbury's had to find the cash for and a further £300mln to pay off Argos' debt.
rolo7 - what you're thinking about was Argos loan book..... Sainsbury was transferring Argo’s loan book to its own bank. It was then going to use the bank’s customer’s deposits to pay for the loan book, which was valued at £600 million. Sainsbury's had to put in £100mln of its own money to comply with banking core tier-1 capital requirement.
Where the take over doesn't work is Argos appealing to the working class customers, while Sainsbury appealing to the middle class. |
Aldi and Lidl don't offer customer delivery for a reason. That said, as one of the established major supermarkets who compete with one another, who has got the balls to say we are going to stop doing it. What % of the market would they need to loss before it tipped over from being cost neutral to loss making, 1% / 2%? Lots of Sainsburys shops have just taken ownership of brand new fleet of delivery vans too at circa £60-70k per van. |
Argos had cash in the bank, sbry used Argos own cash and Argos card future payments to buy it? |
"E-commerce in supermarket food retail is undermining profitability. Online sales of groceries are making a loss. Customers who pick their groceries from the shelf themselves are much cheaper for the supermarket than home delivery. No one dares to put the service costs entirely on the consumer's plate." |
As for online home deliveries it costs a supermarket on average £20 to fulfil each home delivery meaning they are effectively paying customers to shop online with them.
If a customer has a delivery just once a week, in a year will cost the supermarket £1,040, nowhere near how much the customer is actually paying. This means customers who shop in store are effectively subsidising online home delivery, subsidising the lazy so and so's who can't be bothered going in to the store to do their own shopping.
And how much is Sainsbury's currently charging for home delivery, I believe just £80 a year which means Sainsbury's are making a loss of £960 per customer per year on their online grocery home delivery service.
If supermarkets charged £20 for each home delivery then the number of customers using this service would shrink to virtually nothing. |
I also get from reading the article that Sainsbury's now feel that buying Argos was not a good idea and what a waste of £1.4bln, or at least way over paid for the company.
At the time this is the reason Sainsbury's gave for buying Argos - "It argues buying the group, external would help it to boost sales growth {which it hasn't}, improve its delivery networks, and mean they could sell their products to each other's customers {which it hasn't}."
At the time of the take over Sainsbury's said as leases expire it would move between 150 to 200 Argos stores into its supermarkets when if fact they've moved around 500.
In the past 6 months analysts have said the following about Argos - "Argos is a drag on Sainsbury's despite grocery growth."
Usually as in any take over, the company buying pays too much for the company they're taking over.
It seems to me reasonable to say most companies over value therefore over pay for 'Good Will'. On some companies account they put down 'Good Will' as 25% of the worth of their company when in reality 'Good Will' is worth a couple of percent at the most.
A year or two after any take over, how many times does a company completely write down the Good Will of the company they've taken over - usually most of the time. |
“Let’s be really clear: nothing trumps value for money. Customers make decisions every day based on the price on the shelf and that’s never changed. If you’re not super sharp on price customers will go somewhere else”, he said.
Cheap and Value for money are too completely different things as usually the cheapest are the worse value for money. |
To me the most important part of the article is:
What Roberts doesn’t mention is that Sainsbury’s strong performance has been partly down to the struggles of Asda and Morrisons. Both chains became less competitive on price since they were saddled with heavy debt loads after being taken over in private equity backed buyouts.
Shows that it's not Sainsbury's who are doing well, rather Morrisons and especially ASDA are doing badly. |
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