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In a wide ranging interview at Retail Week Live, Tesco's Chief Product Officer Jason Tarry has spoken of how stronger supplier relations are crucial to Tesco's future and provided new insight around its strategy.

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Tesco and Booker have confirmed that their merger has become effective as of 8am on 5 March 2018, following court approval.

Resounding 'yes' vote from both sets of shareholders

The completion of the merger follows a resounding vote in favour of the deal last week, with 85% of Tesco shareholders and 83% of Booker shareholders backing the merger. The merger will result in a vertically-integrated business, with annual UK sales of £47bn (Tesco £42bn and £5bn for Booker).

Platform for growth

The merger will extend Tesco's reach into the fast growing foodservice sector as well as broaden its participation in the convenience channel. Both are attractive opportunities for the UK's largest retailer as it looks for new ways to offset the long term challenge from declining shopper footfall to larger stores. Booker's sales to caterers amount to over £1.7bn annually and it supports nearly 5,500 symbol convenience stores under the Premier, Londis, Budgens and Family Shopper fascias.

Booker synergies already being developed

The vote to merge followed just a week after Booker opened its first Chef Central unit at Tesco's Bar Hill Extra store in Cambridge, aimed at professional caterers. The merger could now pave the way for a number of other similar openings to drive incremental sales from under used space, if the trial proves successful.  Click here for photos and our first impressions.

Charles Wilson to stay with merged business

Upon completion of the merger Booker CEO Charles Wilson has become the CEO of Tesco 's new retail and wholesale, UK and Ireland division.  Booker's chairman Stewart Gilliland has also joined the Tesco board as a non-executive director. Tesco's UK and ROI CEO Matt Davies will stand down at the end of April after a handover period.

Complementary retail and wholesale skills

Commenting last week on the votes by shareholders, Dave Lewis, Group Chief Executive of Tesco, said: "I’m delighted that the shareholders of both companies have supported the merger. This merger is about growth, bringing together our complementary retail and wholesale skills to create the UK’s leading food business. This opens up new opportunities to provide food wherever it is prepared or eaten – ‘in home’ or ‘out of home’ – and will benefit our customers, suppliers, colleagues and shareholders."

For more insight, visit Tesco and Booker: merger approved by shareholders

 

IGD Tesco Business Update 2018

23 May, London

Hear from Dave Lewis, Group CEO, Jason Tarry, Chief Product Officer, and Alessandra Bellini, Chief Customer Officer, along with their leadership team who will provide a business and commercial update.

Find out more »

Shareholders of Tesco and Booker have backed their boards and voted in favour of merging the two businesses.

Resounding 'yes' vote from both sets of shareholders

85% of Tesco shareholders and 83% of Booker shareholders backed the merger, which is now expected to be completed on March 5th having already received clearnace from the UK Compeition and Markets Authority. The merger will craete a vertically-integrated business, with annual UK sales of £47bn (Tesco £42bn and £5bn for Booker). The deal was worth £3.7bn when it was first proposed in January 2017 but was valued at over £3.9bn at yesterday's closing share prices. 

Platform for growth

The merger will extend Tesco's reach into the fast growing foodservice sector as well as broaden its participation in the convenience channel. Both are attractive opportunities for the UK's largest retailer as it looks for new ways to offset the long term challenge from declining shopper footfall to larger stores. Booker's sales to caterers amount to over £1.7bn annually and it supports nearly 5,500 symbol convenience stores under the Premier, Londis, Budgens and Family Shopper fascias.

Booker synergies already being developed

The result follows just a week after Booker opened its first Chef Central unit at Tesco's Bar Hill Extra store in Cambridge, aimed at professional caterers. The merger could pave the way for a number of other similar openings to drive incremental sales from under used space, if the trial proves successful.  Click here for photos and our first impressions.

Charles Wilson to stay with merged business

Upon completion of the merger Booker CEO Charles Wilson will become the CEO of Tesco 's new retail and wholesale, UK and Ireland division, as announced on February 5th.  Current Tesco UK and ROI CEO Matt Davies will stand down at the end of April.

Complementary retail and wholesale skills

Commenting on today's votes by shareholders, Dave Lewis, Group Chief Executive of Tesco, said: "I’m delighted that the shareholders of both companies have supported the merger. This merger is about growth, bringing together our complementary retail and wholesale skills to create the UK’s leading food business. This opens up new opportunities to provide food wherever it is prepared or eaten – ‘in home’ or ‘out of home’ – and will benefit our customers, suppliers, colleagues and shareholders."

For more insight, visit Tesco and Booker: merger approved by shareholders

 

IGD Tesco Business Update 2018

23 May, London

Hear from Dave Lewis, Group CEO, Jason Tarry, Chief Product Officer, and Alessandra Bellini, Chief Customer Officer, along with their leadership team who will provide a business and commercial update.

Find out more »

Booker has now opened its first implant within a Tesco store so we popped in to check it out.  Located in the Tesco Extra hypermarket at Bar Hill, Cambridge, the Chef Central unit occupies approximately 10,000 sq ft (930 sq m) partitioned off in one of the front corners of the store.

Source: IGD Research

Effectively a separate trading unit, it has its own entrance, welcome desk and tills, and stocks products drawn from the established Booker ranges, primarily targeted to the small-scale, independent catering business customer.  While Chef Central is an established sub-fascia within many Booker cash & carry depots, this is the first time it has been deployed as a standalone format.  If successful, it could be rolled into numbers of other Tesco hypermarkets to drive incremental sales from under-used space. 

Top-up range for catering needs

With a range primarily comprising ambient bulk packs and catering formats the Chef Central unit provides an edited selection of Booker's frequently purchased products across key categories used by professional caterers.  These include back-of-house (i.e. kitchen) staples, such as bouillons and stocks, as well as front of house staples such as portion packs for sauces.  Key non-food consumables central to caterers' needs, such as takeaway packaging and cleaning products (including the ubiquitous 'blue roll') also have a significant presence.

Source: IGD Research

Limited chilled and frozen

In contrast chilled and frozen ranges have only a restricted representation (and fresh produce none), indicating it would be hard for many catering customers to do a 'full shop' at this location.  However, bearing in mind the presence of the extensive Tesco offer so close by, there is clearly scope for a caterer to cross-purchase between the two to meet limited volume needs.  Historically it has been recognised from Clubcard data that some of the biggest spenders amongst Tesco customers are likely to be those shopping for small scale professional catering business.

Open to the general public

While enabling registered Booker customers to shop as business customers within the store, the Chef Central unit is also open access for shopping by the general public too.  Drawing on the inspiration of the well-known Costco best sellers, the store prominently displays cases of single serve bottled water and bulk packs of toilet roll, offering a strong value purchase for large scale domestic needs.  While offering a limited range in licensed drinks the value provided by commercial case sizes also offers clear value for shoppers looking to entertain at home.  Aiming to dissuade too many small value transactions, the store advertises a required minimum spend of £30, though this is a flexible threshold. 

 

IGD Tesco Business Update 2018


 

23 May, London

 

Hear from Dave Lewis, Group CEO, Jason Tarry, Chief Product Officer, and Alessandra Bellini, Chief Customer Officer, along with their leadership team who will provide a business and commercial update.


Find out more »

Presentations

11/05/2018
An essential summary of trading priorities, latest developments, and other key commercial insights for Booker.
06/03/2018
The merger between Tesco and Booker has now been completed. IGD looks at the new business that has been created.
23/01/2018
We review the remapping of customer relationships and the impact on UK wholesaling, following the collpase of the market's leading delivered operator.
View all presentations

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