New supermarket giant would have 31.4% market share, compared with Tesco’s 27.6%

Zoe Wood Retail correspondent
Sat 28 Apr 2018 13.40 BST Last modified on Sat 28 Apr 2018 18.34 BST.

Sainsbury’s and Asda  are in talks over a £10bn merger that would send shockwaves through the high street by creating a retailer more powerful than the current market leader, Tesco.

A tie-up between the UK’s second- and third-largest supermarket chains would create a new group with huge shares of the market in food, clothing, household goods and toy retailing.

Sainsbury’s already owns Argos while Asda’s George clothing brand vies with Marks & Spencer and Primark to sell the most clothing in volume terms. The enlarged supermarket group would have nearly 3,000 stores and annual sales of more than £50bn.

Any proposed deal is likely to be closely scrutinised by the competition watchdog over concerns it would tighten the grip the four major supermarket chains – Tesco, Sainsbury’s, Asda and Morrisons – have on the UK grocery market.

Competition regulator likely to choke on Sainsbury’s-Asda deal

Analysts also suggest the combination could lead to thousands of job losses as the two chains cut out duplication.

The big supermarkets have recently cut thousands of back-office and shopfloor jobs in a drive to cut costs.

They are trying to rebuild their profits, which have collapsed as the fast-growing German discounters Aldi and Lidl have stolen shoppers, while online players led by Amazon have sucked sales out of the high street.