Steven Esom, a retail veteran who served as the managing director of Waitrose from 2002 to 2007, said that retailers are now turning to mergers and acquisitions (M&A) as a means to control costs and maintain market share.
“Any business looking at their cost base can see the advantage of consolidation,” he said, explaining that sales volumes are “absolutely key to keeping costs down” for consumers.
“People are looking at making their businesses more efficient and clearly any type of inflation passing through – that’s got be mitigated.
“So I would think that businesses are doing this to mitigate the effects of inflation.”
His comments come amid a flurry of M&A activity in the supermarket sector, with Tesco currently attempting a £3.7billion merger with Booker.
A tilt by Sainsbury’s to acquire Nisa is also thought to be on the cards, while reports emerged earlier this summer that Walmart-owned Asda was exploring a £4.4billion takeover of discount retailer B&M.
“Businesses are now looking at every way of increasing volumes to mitigate costs,” Mr Esom said.
Since the Brexit vote triggered the pound’s collapse, retailers have been grappling with a double whammy of rising import costs for goods and rapidly deteriorating consumer confidence.