The bosses of Asda and Sainsbury’s, has been accused of using “figures of Mickey mouse” by deputies, who also dismissed the promise of two shopkeepers continue to operate as separate brands after the merger as “nonsense”.
In a bruising session on Wednesday morning, Neil parish, Chairman of the parliamentary environment, food and rural Affairs Committee, said Asda chief Executive Roger Burnley’s “there is no logic in this transaction, in addition to financial fix for you both.”
“We are not children, you can’t just come in here and give us the rhyme,” said parish.
He questioned the assessment of the two companies, they together accounted for 25% of the grocery market. Calculations of two shopkeepers include rivals such as Marks & Spencer and B&M deal, while the data that includes only the main grocery chains shows that Sainsbury’s and Asda accounts for over 30% of the market.
Burnley said, Asda and Sainsbury’s will continue to operate as a “two independent brands to do the right thing for our customers.” He insisted that the promised reduction of prices by 10% – that he eventually would have recognized just a number “every day basis” – can’t be obtained by forcing lower prices from suppliers. He said that the savings in the business will be invested in the most competitive areas of the product.
Burnley and Mike coupe, Sainsbury’s Executive Director, both said that their plan was to focus on getting more favorable terms from major suppliers, ensuring that the combined group has paid a lower price if they are on different conditions. They said that these major suppliers will benefit from the supply of one organization, not two, and the buyers wanted to get cheaper prices on items like toilet paper, detergent, canned tomatoes, and milk.
They insisted that small suppliers, which make up only a small proportion of retail turnover will not be affected.
Said that the arrival of the two companies could make savings and pass the promised lower prices for buyers by reducing prices for all suppliers.
“Asda and you have to play. Money needs to be saved somewhere,” he said.
Parish suggested that they were likely to take the side of the operating Asda, buy less from British farmers, and accused them of trying to cover up their true plans. He said that the company is likely to further staff reductions at the head office on line.
“You are going to run two different things?… it’s incredible,” he said. “This is nonsense … six months or even a year down the road, it will be one system.”
Burnley said, “there is a mood of optimism among suppliers. This change in our ability to offer customers what they want, best quality and best prices”.
Parish insisted that most suppliers were “terrified” and it was “a huge problem to get someone to say anything” about the deal because of this.
He also questioned whether the major vendors will agree on new conditions Asda and Sainsbury’s wanted. “It is not plausible that major suppliers are all going to bow down … no they are not because they are bigger than you,” he said.
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Even if the major suppliers don’t agree to reduce prices, he suggested that they could Fund this by putting pressure on small suppliers down the chain.
Coupe deprived “means that we will work everything to the lowest common denominator”.
“I’ll be CEO of this company. I am very proud of my track record over the decades in raising industry standards for all that you see in the world, and [in] the leading edge of the many things we do in the UK,” he said.
He also said that standards will not slip in Sainsbury’s after the merger.
“If we’re doing something that frustrating [buyers], they will not to shop with us,” he said.