Srcg managing director, Neill Sherrell, said the diversity of the Somerfield estate – it operates 955 stores and has a 3.7% market share – would make it difficult for the business to be sold as a going concern.
“While there is likely to be a dominant grocery partner in any bid, this could end up as a massive trading auction amongst all the major players,” said Sherrell.
Market leader Tesco would be unwise to plump for the full Somerfield estate, said Sherrell, but Asda is a strong contender.
“It is known that Bentonville sees the failure to develop a UK convenience offer as part of the reason why it trails Tesco’s market share by such a large margin,” he said.
Sainsbury’s, the number three player, may see Somerfield as an opportunity for its convenience business, according to srcg. It has just announced plans to sell off 36 c-stores it bought from Jackson’s and Bells in 2004 because they are too small for its Local format, so could be in the market for new property.
Morrisons is an unlikely contender, added Sherrell, but a joint Waitrose and the Co-operative Group bid could be a strong runner.
Equally, Spar and Musgrave Retail Partners (Budgens) could benefit from a sell off of smaller stores by Sainsbury’s or Asda as part of a post sale break up agreement, he said.
The store portfolio may even tempt one of the hard discounters – Aldi, Lidl or Netto – to take the plunge, he added.
Click on the link to read Neill Sherrell’s full analysis of the Somerfield auction
