Strategies Behind Sainsbury’s Acquisitions of Home Retail Group

        Salisbury's has been involved in concessions of Argos in its ten stores; a declared interest was issued by it in the Argos acquisition. Initially, 140 pence share undisclosed were offered by Salisbury's to the home retail group in November 2016, but it was refused. Its interest declaration was followed after the rival suitor for home retail group, Holstein International of South Africa pulled-out of takeover race. Chief executive of Salisbury's, Mike Coupe, insisted that ultimate requirements to serve customers purely fostered this takeover, i.e. “wherever and whenever they want of shop”. There are business strategies behind this Salisbury's acquisition; the arguments were forward by Salisbury's that acquisitions of home retail group including Argos will be help for the company to increase its sales growth, boosting total sites number up to two thousand including click and concessions and collect points, getting access to delivery networks in access and provision of opportunity in selling their good to customers of each other, Argos delivery network was considered as utmost advantage of all (Salisbury's, 2016).

        The mission of Argos was revealed in late 2012 to recreate the company as a leader of digital retail by using the advancement uncatalogued based on technology. £10 million were capitalized by Argos in 2015 into further boosting company services of delivery to offer delivery on the same day order is made (Salisbury's, 2016). It has warned by Salisbury's that up to six hundred head office jobs could be at risk in its £1.4 billion takeovers of the owner of Argos HR (Home Retail Group). However, it has been promised by the company that various hundreds of new roles would be created ultimately through the deal.

    The leases of approximately forty per cent of stores of Argos were due for renewal in approximately 4-5 years. The intention of Salisbury's was shut and move approximately half of the stores of Argos into nearby stores of Salisbury's so that synergy realization of Salisbury's could be boosted by £160 million through cutting the company costs in terms of legal and administrative costs and property savings. It was suggested by Coupe that fewer stores would be there, however, having more presence points. The following Standoff's matrix is helpful to realize the synergies that may happen after the acquisition of home retail group points to the opportunity for produce development and diversification as well as market development and market growth (Bernbach, 2009).

        An effective synergy could be developed by taking over Argos through cost minimization resulting from efficiency gains and mass production and can minimize the threats of competition that will ultimately enhance the market growth. Further, the acquisition will help boost product development and market development of Salisbury's because this is how instant access can be achieved to new product lines, new markets, and wider varieties of the product. However, Salisbury's risks can also be increased due to the delve of new areas and asymmetry of information need because this is how the knowledge of Argos in these areas will be increased. There is a connection between the Salisbury's and activities of the home retail group that represents the diversity because of the presence of both entities in the retail industry. This is how cost can be saved while guaranteeing the distribution channels’ resource (Bernbach, 2009).

Proposed Acquisition of ADA from Wall-Mart

        Ada was required by Walmart for £6.7 billion ($10.8 billion) in 1999. The grocery market of United Kingdom has been locked in recent years in wars of aggressive price by which retailer margins have trimmed. The competitive heat is turned up even further by the deep discount food chains entry Lid and Aldo, specifically impacting the value play that Ada of Walmart has driven. Retail network Ada's consists of 33 Ada Living stores, 18 stand-alone fuel stations, 584 grocery stores and related online properties, as well as a leading apparel retailer George with both online and in-store offerings (Remand, 2018).

        Ada Group Ltd., U.K. grocery subsidiary of Walmart is being sold to big rival J Salisbury pl through a deal that values at $10.04 billion or £7.3 billion. Under the agreement, 42 per cent of the combined company would be held by Walmart, which would become the largest supermarket company of the United Kingdom, overtaking Tesco pl. Based on the figures of 2017 figures, the total revenue of merged company is approximately $51 billion with a network of over twenty eight hundred Salisbury's, Argos and Ada stores including superstores, super centers, convenience stores and supermarkets as well as some of the most-visited retail websites of United Kingdom, for the combined 47m weekly customer transactions. Walmart, via this transaction, will receive $4.09 billion or £2.975 billion along with 29.9 per cent of ordinary shares of Salisbury's, with a balance kept as nonvoting shares that can be converted anytime into voting shares (Remand, 2018).

        Salisbury's has followed both intended and emergent strategies; the strategy of acquisition of home retail group is described within the strategic plan of Salisbury's in details. However, on the other hand, the case of Walmart’s Ada has been unplanned strategy because it occurred in response to a biggest and unexpected opportunity. It is believed that these acquisitions and strategies will lead Salisbury's towards tremendous success, and it can reach the new levels of success. Few of the greatest achievement will be in the form of a reduction in cost, sales growth, and an increase in market size for the company that will ultimately increase the profit margins.

References of Strategies Behind Salisbury's Acquisitions of Home Retail Group

 Bachmeier, K., 2009. Analysis of Marketing Strategies Used by Pepsico Based on Ansoff's Theory. S .l.: GRIN Verlag.

Redman, R., 2018. Walmart to sell Asda subsidiary to Sainsbury’s. [Online]
Available at: https://www.supermarketnews.com/retail-financial/walmart-sell-asda-subsidiary-sainsbury-s

Sainsbury's, 2016. HRG acquisition. [Online]
Available at: https://www.about.sainsburys.co.uk/investors/shareholder-information/hrg-acquisition

Sainsbury's, 2016. J Sainsbury plc completes acquisition of Home Retail Group plc. [Online]
Available at: https://www.about.sainsburys.co.uk/news/latest-news/2016/02-09-2016-a