Former Waitrose boss Steven Esom has said that Brexit is driving takeovers in the UK supermarket sector, as retailers attempt to “mitigate the effects of inflation”.
The retail veteran who led Waitrose for five years and currently chairs the British Retail Consortium’s food certification business, told the Press Association that the recent flurry of acquisitions in the grocery sector was an effort to make their operations more efficient.
“Any business looking at their cost base can see the advantage of consolidation,” he said.
“People are looking at making their businesses more efficient and clearly any type of inflation passing through – that’s got be mitigated,” Esom said.
“So I would think that businesses are doing this to mitigate the effects of inflation.
“Businesses are now looking at every way of increasing volumes to mitigate costs.”
In the past few months, all of the Big 4 have announced plans to make investments in companies which will secure or seek to dispel inefficiencies in their supply chain and allow them to absorb more price hikes, preventing a further loss of market share to discounters.
“They’ve looked at Brexit, they know there is going to be uncertainty over the next two to three years and again, no one wants to shut off the consumer tap – the consumer demand,” Esom added.
“I think everyone’s very mindful that the small advantage that companies may get by passing through inflation, (which) could be absolutely mitigated by a drop in demand and creating inefficiencies in their supply chain.
“It’s quite a balance for manufacturers and retailers, but at the end of the day, volume is very important.”