Should the supermarkets break-up for success?

18 November 2014

morrisons 300x300 We all know that the big supermarkets aren't doing particularly well and, as far as the consumer is concerned, why should anyone care? As long as someone is offering a decent price on decent products, it doesn't matter where you shop.

And so, to Goldman Sachs who think they have a solution for the big players in supermarket world - they need to be broken up and scaled down.

In a research note, Goldman Sachs said Sainsbury's, Tesco and Morrisons must cut space by around 20% by 2020 if the want to survive the onslaught from Aldi and Lidl. "Our analysis of the UK grocery industry suggests capacity exit is the only viable solution for a return to profitable growth," their analysts said.

Of course, this isn't the first time that someone has suggested that. We've spoken about the idea of Tesco becoming 'smaller' in a bid to stay relevant.

It is believed that like-for-like sales through the bigger stores will fall by around 18% and that earnings could also fall by 60% between 2013 and 2017 if supermarkets don't sort this issue of space, out.

The supermarkets have already noticed this and tried to find a remedy for it, that's why so many of them are setting up 'convenience' versions of their supermarkets, because no-one is using their enormo-markets that are found out-of-town.

And while the big four have been slashing prices, or at least threatening to, it isn't enough according to Goldman Sachs. They think that "the major decisions that will shape the future of the UK grocery market are yet to be taken".

We can only wait and see.

TOPICS:   High Street News   Supermarket


  • Alexis
    It's because they take us for fools. Every supermarket has gimmicks and some sort of price match where you have to fart about and they can't all be right. So it's assumed they're all telling lies, and all those programmes about how they fix their offers doesn't help. The Sainsbury's 'make them spend an extra 50p' poster sums it up. As long as they keep on acting like two faced politicians, people will treat them with disdain. Waitrose and M&S don't attempt to sell on price and they keep doing well. Is it a coincidence?
  • George C.
    I for one would be happy if the Co-op curled up and died. It's going to happen anyway, why not now?

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