Following a surprise merger between supermarket giants Sainsbury’s and Asda agreed today (April 30), Unite is calling for urgent assurances over jobs.
Combined, the two retailers employ 360,000 people in the UK. The retailers have said that they will maintain the same branding and have pledged to cut prices on everyday products by 10 per cent. Walmart – the owners of Asda – will get £3bn in cash from selling its UK stores to Sainsbury’s and will still maintain a 42 per cent stake in the business. Anticipated annual sales for the new merger will be £50bn.
Despite Sainsburys chief executive Mike Coupe saying he was “100 per cent confident” stores would not close as a result of the merger, analysts have said otherwise.
The Competition and Markets Authority (CMA) confirmed it would likely be investigating the merger to determine if the deal would reduce competition and choice for shoppers. The CMA could potentially force the new merged retail giant to sell off Sainsbury’s or Asda stores when they are located too close to one another.
Investment research firm Edison said the CMA “often uses a local test of proximity, that is 1 mile or 5 minutes’ drive time” and that around “70 of Asda’s 630-odd stores are located within a mile of one of Sainsbury 1400 outlets.”
Head of retail at Gordon’s Law Firm Andy Brian also highlighted that store closures would likely be inevitable if the merger went through.
“One thing is clear; despite what is being said officially, stores would have to close,” he told the Guardian. “That’s not necessarily a bad thing for the brands, although it would of course be a bad thing for those store employees.”
Labour urgent question
The Labour Party today (April 30) put forward an urgent question to discuss the potential for job losses and the impact on consumer choice following news of the merger.
Labour’s shadow business secretary Rebecca Long-Bailey said that there were “risks to jobs by potential reorganisation and store closures and risks to the wider grocery industry as a Tesco/Sainsbury’s-Asda duopoly emerges with unrivalled power to dominate, dictating choice and prices for consumers which in time may prove detrimental.”
Bailey also highlighted the “unrivalled power” of a Sainsbury’s-Asda merger which she said would pose “immense risk to suppliers with unprecedented bargaining power to drive suppliers’ prices and payment terms down which could cause instability and damage to the food and grocery manufacturing industry.”
The impact on suppliers was also highlighted today by the Federation of Small Businesses national chairman Mike Cherry.
“A merger of this size will concentrate a lot of power in the hands of one giant company, and it’s important that power isn’t misused to coerce small suppliers into accepting unfair contracts and poor payment terms,” he said.
He called for assurances “that cost savings won’t be achieved simply by milking their small suppliers for all they’re worth.”
If the merger is approved by the CMA – its investigation could take up to four months to complete – the new retail giant will be the largest UK supermarket in history, dominating with a market share in excess of 30 per cent.
The news will add yet more uncertainty for Sainsbury’s workers, 12,000 of whom Unite represents, whose terms and conditions were already under threat. Last month, the retailer said it would be giving shop staff a pay rise to £9.20 an hour – but would slash Sunday premium pay, paid breaks and other perks that Unite has said would totally nullify the pay rise. They are also being asked to accept a pay freeze until 2020.
Many would be left worse off under the deal, since many Sainsbury’s workers depend on working tax credits and in-work benefits which could be taken away after the pay rise.
Earlier this year, Sainsbury’s announced a management shake-up that would slash certain roles and could lead to thousands of redundancies – workers have been effectively told to sign up to new, lower-paying roles or be sacked in September.
In light of the new merger and the insecurity it has brought to thousands of Sainsbury’s workers, Unite is calling for the retailer to halt its ‘robbing Peter to pay Paul’ pay deal and to withdraw the ‘sign or be sacked’ contracts.
Unite acting national officer for food and drink Joe Clarke slammed the way workers found out about today’s merger – through media speculation on Saturday morning and not through their managers.
“Sainsbury’s workers are in a state of shock at the prospect of a merger with Asda,” he said. “Long serving store staff were already facing the imposition of a ‘sack or sign’ contract, the loss of Sunday premium pay and paid breaks, in addition to no increase in salary until 2020.
“They along with their colleagues in warehousing and logistics now face the uncertainty of a proposed merger, the threat of more job losses and the possibility of store closures,” he added.
“Loyal workers are being put through the mill by Sainsbury’s bosses’ and should not have to face yet more uncertainty,” Clarke noted. “Sainsbury’s needs to offer job guarantees and withdraw its ‘sign or be sacked’ contracts and stop ‘robbing Peter to pay Paul’ to fund a pay deal as a matter of urgency.
“The greatest asset that Sainsbury’s has is its staff. It’s time the supermarket giant started treating them with the respect they deserve.”
Stay tuned on UNITElive as this story develops.