What will the Asda/Sainsbury's merger mean for the retail sector?
As the dust settles on the proposed Sainsbury's and Asda merger one of the core questions marketers will be thinking about is what does this mean for brand comms for the newly merged organisation.
So far, we understand that both brands will co-exist alongside the other Retail facias in the group - Argos and Habitat. In many ways this is great news. The businesses - whilst similar on many levels not least in culture - have brands that mean very different things. From our Savvy shopper panel we know that 88% of their shoppers perceived Sainsbury's to be a supermarket offering better quality products than its competitors, whilst a whopping 94% of Asda shoppers still believe that Asda is cheaper than its competitors. These differences in shopper opinion are key in developing relevant brand strategies for their selling channels moving forwards.
A big challenge over the last five years for both brands is that they have increasingly stuck in the middle where their marketing has been concerned, failing to differentiate enough from their competitors whilst fighting on every front from value to quality, provenance to events. The opportunity that this merger throws up is a rare chance to dial up the strengths of the brands and focus on what makes them really different. For Asda that could mean taking the lid off on value with fun - returning to the days of being the place for brand buying, value and fun seeking shoppers to visit week in and week out.
Meanwhile at the other end of the spectrum Sainsbury's can consolidate their position of strength in private label, convenience and quality.
The future of marketing for the big supermarkets will be an intimate understanding of the customer by serving up solutions and inspiration in the easiest and quickest way possible. Strategically this has always been a huge area of weakness for Asda with no loyalty card. The merger could now allow Asda shoppers access to the Nectar loyalty scheme which Sainsbury's in a master stroke bought for a snip at £60 million earlier this year. This will be a real strategic advantage for the combined business.
Shoppers across the UK believe that both brands are strong at supporting positive initiatives for change around things like recycling and food redistribution. Sainsbury's involvement with sports and comic relief has raised a staggering £100m and Asda’s tickled pink campaign has raised an highly impressive £55m. Together in a merged organisation shoppers will expect the new business to do the right thing and lead on strategic initiatives - there is a huge opportunity to tap into the concerns of a generation around plastic, child obesity and waste.
From a support perspective marketing and advertising agencies will now be wondering where this leaves them. There will be obvious places to look for synergies in marketing - in a world where retailers want to cut down on paper and print surely this merger creates a unique opportunity to review the instore experience and remove unnecessary clutter and replace it with a more digital approach. Media buying would be an area for obvious consolidation.
The supermarket sector has collectively upped its ad spend over the past 12 months as the fight for every percentage point becomes tighter and we don’t see this changing in the medium term.
In terms of strategic creative thinking Asda have just appointed AMV having failed to find their creative mojo in the Saatchi years, Sainsbury of course moved from AMV after 35 years to Weiden & Kennedy in 2016. Both agencies have a lot to deliver before the merger is completed and this is a great time for them to show their mettle and produce the work of their lives. There will be plenty to prove and an opportunity to push the brand work harder.
The new merged organisation with a combined colleague base of over 330 thousand employees is going to be one of the UKs biggest businesses. From a marketing perspective this is hugely exciting. The proposed merger will redefine the shape of UK retail landscape. There are certain to be further structural changes and brand collaborations over the next 18 months. Overseeing the marketing of the newly merged business should be the retail marketing job of the century! But the really exciting opportunity? This new business could become the hot bed of emerging marketing talent for the future and in effect grow and nurture the marketing talent and leaders of the future for the whole industry by challenging the way that retail marketing is delivered. Wouldn’t that be the very best long term benefit for our industry and a chance to make a real difference?!
Catherine Shuttleworth is the CEO and founder of Savvy Marketing