The Tesco/Booker merger could have positive long-term impacts on the eating and drinking out sector, a leading analyst has predicted.
Harsha Wickremasinghe, a retail market expert form the M&A advisory firm, Livingstone, told MCA the move could mean Tesco re-evaluating the competition between supermarkets and pubs in particular.
He also said the service Booker provides to the sector could be improved through the link with Tesco through its digital capabilities, logistics and also its access to data on changing shopping habits.
The merger, which was announced this morning, values Booker at £3.7bn.
Wickremasinghe said: “A lot of the focus has understandably been on retail and convenience store sector but there will be longer term implications on the eating out sector.
“This gives Tesco a real stake in the fortunes of that sector that go much further than for example, when it owned Giraffe.
“Is that going to see them totally level the playing field? Probably not but you would have to expect them to look more closely at how different parts of their business are affecting each other.”
Wickremasinghe said there were a number of tangible benefits that Tesco could bring for Bokker’s customers in the sector.
He said: “When you look at Tesco’s extensive logistics infrastructure and delivery and also its expertise on the digital sides, even its banking arm, this is all likely to feed into Booker.
“There’s also the potential for operators to benefit from the huge amounts of data that Tesco holds. They can see emerging trends in how people are choosing ingredients much earlier than you would see them become apparent in the eating out sector.”
He added: “Tesco know that the way people are shopping is changing and they know that eating out is growing more rapidly than traditional retail. Now they have a vested interest in the health of this sector, and I think they can be a powerful ally.”
