Running separate brands is the only way the Asda and Sainsbury’s merger will work

I can’t imagine there are too many people who expected to read about the proposed merger of Sainsbury’s and Asda over their cornflakes yesterday morning, but happen it did.

It seems wholly surprising that two rivals should see a way forward together, but given the woes of the sector it makes commercial sense.

The discounters are well and truly eating Sainsbury’s and Asda’s share of the market. Aldi and Lidl have built attractive brands opening up the wallets of those traditionally loyal to Tesco and Asda. Indeed, Aldi has been so successful it’s now moved ahead of The Co-Op to take number 5 spot in the supermarket charts.

Not to be outdone, Iceland has recently spent millions to convince us that frozen means high quality. It’s moved away from its ‘I’m a Celebrity’ perception to attract new customers, but in such a way that it’s not left behind its core market of those stretching a budget.

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