Supermarket sales growth; “limited evidence of stockpiling” and Asda’s new owners
Supermarket sales grew by £261m over a four week period when “eat out to help out” ended, with the week ending on 29th September being the busiest since March with 107m supermarket visits.. The British Retail Consortium said that the sales growth was faster than at any time since late 2009.
Sales of toilet rolls increased by 64% and flour by 73%. Alcohol sales at supermarkets also grew by £261m year on year.
Market researchers Kantar reported “limited evidence of stockpiling”, and that “empty shelves (are) more likely due to an increased number of shoppers”. Tesco reported that people were shopping less often but buying more. We tend to agree, and feel that customers were buying an extra pack of toilet paper that they didn’t need as part of a larger than usual shop, rather that the frenzied panic buying that we reported in March ( View from behind the till ).
Morrisons and Tesco restricted sales of some items, while the other supermarkets simply didn’t panic, with no return to earlier in the year when supermarkets stopped deliveries of non essentials to free up staff to fill shelves alongside the store manager, personnel manager and the receptionist!
At Asda the larger packs of toilet rolls sold out. So they started to fill the gaps with smaller packs, of which stocks were plentiful.
Tesco reported a 8.6% rise in worldwide sales, despite falling sales in the areas of central Europe in which they operate.
Asda’s new owners
Limited press coverage might have helped limit the levels of panic buying, after all Asda’s new owners were much more newsworthy!
The Issa brothers, from Blackburn, and TDR Capital, a venture capital company have bought Asda from Walmart subject to approval by the regulators. The brothers company EG Group is also 50% owned by TDR Capital, and operates 6000 petrol stations. Other ventures include 146 KFC franchises. The brothers were awarded CBE’s in the Queen’s Birthday Honours list one week after the deal was announced.
TDR Capital are based in London and own the David Lloyd Leisure business. They previously owned Pizza Express (now Chinese owned) and Zizzi restaurants.
Asda were formed when the Asquith family merged their business with Associated Dairies, a cooperative, in 1949. The name is derived from ASquith and DAiries. The ethics that were derived from the company’s origin which brought together a family business and a cooperative, and may have been slightly at odds with the ethics of Walmart, the world’s largest company by revenue.
Both Asda and the new owners regard the take over as a good fit. Asda said “they talk our language” while Mohsin Issa spoke of “shared northern values”. Walmart will retain a small stake in the business which will mean that Asda will continue to benefit from Walmarts buying power.
The deal values Asda at £6.8bn, not much more than the £6.7bn that Walmart paid for the company in 1999.
The expansion of EG Group has been funded, at least in part, through borrowing. Their accounts show debts of £7bn and it owes £9 for every £1 it earns.
The new owners have borrowed another £4bn to fund the Asda deal. When all this is taken into account, the net worth of the brothers is estimated by the Sunday Times at £3.5bn.
Photo: “Limited evidence of stockpiling”. An Asda toilet roll aisle on 29th September.
