Blog: Booker's move for Londis and Budgens sign of the times
Dean Best | 21 May 2015
UK cash-and-carry and convenience retailer Booker Group has struck a deal to buy the Londis and Budgens symbol retail chains from Ireland's Musgrave Group - and emphasised the changing retail landscape in the country.
As the largest food wholesaler in the UK, Booker is already a destination for independent retailers but it also owns the symbol retail brands Premier and Family Shopper.
With a bid worth GBP40m, Booker is looking to add Londis and Budgens to its stable, a move that shows how the convenience sector has played a role in the waning of the supermarket. Alongside online, the convenience channel is one of the growth areas of UK grocery.
However, it's also a transaction that shows how competitive the UK market is. The Musgrave Retail Partners GB Limited business - of which the Londis and Budgens brands are a part in the UK - enjoyed sales of GBP833m in 2014 but also made an operating loss of GBP7.4m.
Adding the Londis and Budgens brands in the UK will make Booker's symbol retail business a more national one. Booker's Premier and Family Shopper chains are more weighted to the Midlands and the north of the UK. Londis and Budgens will beef up Booker's business in south-east England and London.
Nevertheless, it was notable in Booker's statement how it underlined the benefits of scale it believes the deal will bring. "The increased scale and operational efficiency should help lower prices, and retailers will benefit from a better delivery and cash and carry service. This will help independents prosper amid the changes that are occurring in the grocery market," Booker said.
Of course, in the UK, symbol retailers and independents do not just face competition from supermarkets. Perhaps the biggest game changer in the country has been the rise of Aldi and Lidl, which continue to grab market share. And their success is causing the likes of Tesco and Morrisons to fight back on price and range.
Booker's shares jumped on the news of the deal, which remains subject to competition approval. But the enlarged symbol business will need all the scale benefits it can get in such an intensely competitive marketplace.
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