Let's face it, apart from shareholders, no one is keen on a merger. Customers often fear choice reduction, staff fear job losses, and in the case of Sainsbury’s and Asda, the supply chain fears increased price pressure.
So what makes a successful merger?
It’s a timely question given that M&A activity is at an all-time high, partly driven by the weakened pound and low valuations for UK businesses.
Both Asda and Sainsbury’s have bold, fully-established brands where customers know what to expect when they walk into a store. That means these two supermarket giants have a different set of challenges to most brands post-merger, where a new brand is created (Dixons Retail + Carphone Warehouse = Dixons Carphone), or one swallows the other whole and the parent brand needs redefining (Morrisons + Safeway = Morrisons).
With this in mind, I’d advise any merger and integration team to consider the following.
Meeting of minds
While many mergers are about market dominance, the best are a deeper meeting of minds. Think Microsoft and LinkedIn, or Disney and 21st Century Fox. Establishing common themes, cultures, and styles of leadership will help you set the foundations to build a common philosophy and customer proposition.
It’s a chance to become more than the sum of your parts from the outset.
The future is now
It’s important for businesses to fight the urge to focus on short-term to-do lists, and instead to be radical.
Ask “how big is our future?” and work backwards from there. That’s the way Amazon’s been thinking, with diverse acquisitions from grocery chain Whole Foods to video streaming platform Twitch.
Many big mergers get called off last-minute (remember Kraft Heinz and Unilever last year?), leaving both businesses suddenly behind their competition. This is often due to eyes on both sides focusing on internal ambitions and impending operational realities.
What’s missing is external perspective. Keep an eye on global trends, and cultivate curiosity.
Unite the clans
A new venture needs a narrative that works as a rallying cry for its new, combined workforce – even when the brands remain standalone.
For Sainsbury’s and Asda, this should be relatively simple from a slogan perspective. Asda’s “Save Money. Live Better” slogan speaks well to Sainsbury’s “Live Well For Less”, providing a cohesive narrative for the two to drive towards a united future.
Not every merger needs a radical brand overhaul, but as a business hones its story, assess whether it best represents what it wants to tell customers. A merger is an opportunity to present a fresh identity to the world.
Ultimately, every merger is unique, and they represent a major turning point for businesses.
I’ll be interested to see how this latest deal fares, both as a shopper in my local Sainsbury’s, and as a curious brand expert.