Blog: Somerfield buy is sweet music for Co-op boss
Dean Best | 21 July 2008
In his spare time, UK retail's man of the moment, Co-op chief executive Peter Marks, doubles up as the drummer in a Rolling Stones covers band.
After his protracted pursuit of larger rival Somerfield, the rock gods' 1969 hit You Can't Always Get What You Want is likely to provoke a knowing smile from the Yorkshireman.
For last week, at the second time of asking and three years after Marks first expressed an interest in buying Somerfield, he finally got his man.
The Co-op's GBP1.6bn (US$3.2bn) takeover of Somerfield will shake up the UK's grocery sector, creating the country's fifth-largest grocer and the largest group in the buoyant convenience channel.
When we spoke to Marks on the day the deal was announced, there was no hiding his delight at finally snapping up Somerfield. But, while the acquisition gives the Co-op the opportunity to compete more effectively with the UK's "Big Four", questions remain over the future of the enlarged business - not least over the integration of Somerfield into the business.
What is certain is that it will be fascinating to watch the changes in the UK grocery landscape in the months ahead.
China's grocery retail scene, meanwhile, remains a thriving place to do business, according to figures out last week. Retail sales surged by almost 22% during the first half of the year, with grocery sales outpacing even that growth and jumping 25%. The figures highlight why many international retailers view China as a key emerging market, where growth can offset more mature markets in the West.
However, the spectre of inflation is looming in China, giving retailers a new set of problems to deal with. The consumer price index rose by almost 8% during the first half of 2008 and, although inflation eased slightly compared to May, soaring producer prices and food prices are keeping the general figure high. The price of food jumped 20.4% in China from January to June meaning that, just like in the West, dealing with inflation is top of many a retailer agenda.
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