Sainsbury’s merger with Asda ‘could put 2,500 jobs at risk’
Jobs in the two supermarkets' supply chains could be at risk after Sainsbury's CEO promises 10 per cent price drops for customers
UP to 2,500 jobs in supermarket supply chains could be at risk if Sainsbury's merger with Asda goes through, a think tank has warned.
Research by the New Economics Foundation has found that the promised 10 per cent price cuts on everyday items could be putting jobs at risk at the supermarkets' suppliers.
Sainsbury's CEO Mike Coupe promised the price drop on every day products when the merger between the two supermarkets goes ahead in 2019.
Both supermarkets have ruled out job losses and store closures, but one way these savings could be made is by negotiating lower prices with suppliers.
The think tank has warned that a five per cent price cut could lead to 1,200 job cuts in the supply chain, while a 10 per cent drop in prices could amount to 2,500 jobs being axed.
It also warned that there could be more jobs in the balance as their research only looked at part of the two supermarkets supply chains.
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A supermarket's supply chain covers everything from the people providing meat, vegetables and other raw materials for own brand products, all the way to the drivers taking products into the stores.
Retail expert Richard Hyman previously told The Sun: "Lot of suppliers are very sceptical, they are saying well where is the 10 per cent coming from? We don't have 10 per cent that we can cut.
"There is going to be a lot of push back from suppliers and it is going to be very difficult for Sainsbury's to keep that promise."
Alfie Sterling, from the New Economics Foundation said: "If the proposed merger between Sainsbury’s and Asda is allowed to proceed, we are likely to see a classic case of monopoly like power in a market where things are already heavily stacked towards the ‘big guys’."
A spokesperson from Sainsbury's has said: “We strongly refute the NEF’s methodology and conclusions. A more resilient business, with lower prices and increased sales will result in higher volumes for suppliers."
"The proposed combination would create opportunities for suppliers as well as for customers, colleagues and shareholders.”
A spokesperson from Asda has said: "The proposed combination of Asda and Sainsbury's is the best way to accelerate our strategy to exceed customers' expectations."
"If it's good for customers, volumes grow which is good for suppliers, with whom we have established long-term relationships. On that basis, this is an opportunity to grow together."
If the merger goes through the new supermarket group will have combined revenues of £51billion and will aim to generate £500million in cost savings.
And even though the supermarkets have said that that there will be no store closures, experts have identified up to 75 stores which could be at risk.
But, there may be some perks for customers from the deal including being able to use nectar points in Asda.
The Sun Online has contacted both supermarkets for comment.
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