Iceland to bid for Sainsbury’s & Asda stores if merger approved

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Iceland
// Iceland is considering bidding for any Sainsbury’s & Asda stores, if their merger is approved
// Sainsbury’s and Asda may be forced to sell off some store assets before merging
// Iceland is aiming to expand its Food Warehouse business

Iceland is contemplating on placing a bid for any stores Sainsbury’s and Asda are required to sell in order to have their proposed merger approved.

Iceland’s managing director Richard Walker said the grocers’ traditional superstores “would be too big” for Iceland to take on but revealed ambitions to expand its Food Warehouse division.

“You can redevelop, you can carve up, you can put in neighbouring retailers alongside,” Walker told the Financial Times.

“We are looking at everything for sure.

“Food retail drives footfall and we are the only supermarket that is opening on retail parks. We are looking at every retailer, trying to pick off as much as we can.”

The CMA is expected to release its findings of an in-depth probe into Sainsbury’s takeover of Asda this week.

The majority of Iceland’s existing UK stores are in town centres but it started introducing a larger format called The Food Warehouse on retail parks in 2014.

The Food Warehouse, of which there are almost 100 operating, tends to have twice the floor area of a normal Iceland store.

They also have lower gross margins but are more efficient to run “because they’re all square boxes”, Walker said.

He added that the the format was influenced by the rapid expansion of German grocers Aldi and Lidl since the financial crisis.

Iceland’s Food Warehouses still mainly stock frozen food, but also include general merchandise and a wine selection.

Like the discounters, Food Warehouses do not sell online or offer home delivery.

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