David Reviews

 Biting the hand that feeds us since 2002.

CAPTAIN'S BLOG: MERGER MOST FOUL.
1 May 2018

The City was genuinely caught on the hop a few days ago when news broke that Britain's second biggest and third biggest supermarkets were in advanced talks about a merger.

For Asda and Sainsbury's the timing was inconvenient as they weren't quite ready to go public and they've been scrambling all weekend to provide answers to those with concerns about the move.

There have been too many other matters to examine for journalists to focus on the advertising agencies which represent these brands but - if this merger goes ahead - it could lead to considerable disruption in the ad industry.

There are at least three agencies who'll have an eye on the ongoing negotiations. Wieden+Kennedy who hold the Sainsbury's account, Abbott Mead Vickers BBDO who have just won the Asda account and The & Partnership who create the advertising for Argos, the retail chain acquired by Sainsbury's in 2016.


It must have been like discovering that a new love interest is best friends with the spouse you split up with last year.

 ”

Each will have cause to be anxious. Even though Asda and Sainsbury's have declared their intention to maintain separate identities for their brands, they have also made it clear that aligning costs will be a key benefit of any merger,and there's no reason to suppose their advertising budgets will be immune to the parsimony of the new entity.

Ironies abound. The recent decision of Asda to shift their account from Saatchi & Saatchi to AMV must have the cause of great celebration as it was a like-for-like replacement for the Sainsbury's account they lost to Wieden+Kennedy in 2016. When AMV found out about the proposed merger it must have been like discovering that a new love interest is best friends with the spouse you split up with last year.

Meanwhile, the sense of deja vu in Rathbone Place must be palpable. The & Partnership are Argos's agency and they've managed to remain so during several changes of ownership for the high street retailer. But can they expect that to remain the case if Sainsbury's merges with Asda?

It's a familiar scenario for them... when Carphone Warehouse merged with Currys PC World, The & Partnership (or CHI as they were then) faced the possibility of doing battle with AMV to establish primacy. Fortunately for both agencies, there was no reason to duke it out as the merged entity - to a large extent - maintained both brands, and each stayed with its incumbent agency.


They've made it clear that aligning costs will be a key benefit of any merger.

 ”

While it seems likely that - for the time being at least - Asda, Sainsbury's and Argos will each maintain their own identity, the proposed alignment is nonetheless indicative of a growing sense of danger felt by high street brands.

The trouble they anticipate is further proof that 'what goes around comes around' because these were the very retailers who were indifferent to the plight of smaller retailers as they went from strength to strength, and no one can feel too sorry for them as they glance over their shoulder at the looming presence of Amazon.

Any schadenfreude felt by consumers at the prospects of these giants facing a taste of their own medicine is ill-considered. The dearth of competition as Amazon increases its stranglehold is moving us towards a doomsday scenario in the high street.

It's odd, in a way, that these consolidations should occur just as a crisis at one of advertising's giants could lead to it downsizing its empire.

Let's hope so. The endless appetite for acquisitions has led to a lot of power being concentrated in a small number of tiny hands, and while this is just corporate rough and tumble, independent agencies are frequently responsible for the industry's most interesting work and everything possible should be done to ensure that the best possible climate exists for start-ups.


No one can feel too sorry for them as they glance over their shoulder at the looming presence of Amazon.

 ”

Young advertising companies run by bright entrepreneurs are usually more agile than companies attached to a network and once they've got past the compulsion to tell the world what makes them different, they can give the industry a real jolt.

It isn't quite the same in retail and it isn't realistic to expect new companies to go toe-to-toe with existing brands in the high street because of the required investment and the obvious advantage of muscularity. But that doesn't mean we should benignly accept the prospect of a homogeneous retail landscape... because that's not going to benefit either consumers or the ad industry.

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David Reviews - Lovely Lenzie Ltd, Woodbourne House, Seven Sisters, Lenzie, G66 3AW. Telephone: +44 141 776 7766. Editor: Jason Stone.