Mark Casci: Questions still need answering over the Sainsbury's/Asda deal

Just over three weeks ago the retail world was rocked by the stunning announcement that its second and third largest supermarkets, Sainsbury’s and Asda, were planning their own very modern marriage.

The supermarket industry was once a very stable one, with the biggest battle being the one fought for square footage as Tesco, Asda, Sainsbury’s and Morrisons seeing vast outlets and smaller convenience stores as its route to success.

The arrival of disrupters like Aldi and Lidl, and more recently the shift towards home delivery, had made this once stable industry one which is increasingly one built for adrenaline junkies. The arrival of Amazon into the market place is a slow burner but one that could prove a bigger game changer than any of the above.

It is far from a sector in decline. All of the so-called Big Four are currently performing well. Bradford’s own Morrisons, once described memorably as a supertanker heading for an iceberg, is a remarkable turnaround story and enjoying a period of great success under the effective leadership of chief executive David Potts.

There will be much backwards and forwards no doubt in the coming months as watchdog the Competition and Markets Authority, wades into the detail of this merger and what it will mean for UK retail in general.

For their own part, both Sainsbury’s and Asda appear to be very much in lockstep as to their own narrative concerning the tie-up.

For them, the deal is nothing but good news. All are adamant that no stores will close, that no jobs will be lost and that both brands will remain sacrosanct.

However, questions over this proposition are mounting and need answering quickly for the sake of confidence in the sector which is one of the cornerstones of Yorkshire’s economy,

In its update to the city three weeks ago was the following claim: “Walmart will be a long-term shareholder and partner and will leverage its global scale and investment to support the Combined Business. Upon completion, two Walmart representatives will join the Board of the Combined Business as non-executive directors.

“The Combined Business will be chaired by the Sainsbury’s Chairman and led by the Sainsbury’s CEO and CFO. Asda will continue to be run from Leeds with its own CEO, who will join the Group Operating Board of the Combined Business.”

In effect this means that Asda boss Roger Burnley will sit on the operating board but not on the PLC Board, with all parties clear that any newly-created joint venture would continue to trade in the FTSE100 as Sainsbury’s. And while Walmart have two non-executives on the PLC Board they will be part-time, It is hard to look at such an arrangement without calling it a takeover.

Moreover, Asda’s Leeds headquarters is already on borrowed time. The planned HS2 line into the city centre will almost guarantee its demolition and one might ask what kind of scale a new Asda House would have in Leeds under the new arrangement.

Questions are already being asked in Parliament on the matter. Former Asda House employee and now Conservative MP Mark Menzies, is among many calling Asda’s presence in Leeds into question.

But the matter goes beyond what kind of role Leeds will play in the merged company’s future.

Asda and Sainsbury’s have their own distribution, their own buying functions, their own finance departments, IT centres and HR.

With efficiency being an absolute imperative for the supermarket industry, are we to believe that the merged firm would continue to employ two departments to source its coffee and fruit?

Questions needs answering soon before we are forced to forever hold our peace.