Will 'bigger is better' approach work for Sainsbury's?

Sometimes attack is the best form of defence and this bold move should be seen as a response to threats in the market from a resurgent Tesco's move into wholesaling, the rise of the discounters Aldi and Lidl and of course Amazon - which has the UK grocery market in its sights.

This bigger is better strategy is primarily based on the increased buying power a combined Sainsbury and Asda will have with suppliers. Sainsbury's boss Mike Coupe is promising a 10% reduction in price on regular staples for customers of both stores.

However, one supplier to Asda who spoke to the BBC was sceptical that big price savings could be achieved.

"Does [Mike Coupe] seriously think that Sainsbury's and Asda's buyers have been so bad at getting good prices that he can magic up savings of 10%?"

Mike Coupe told me that although the two companies are forbidden by competition law to compare buying prices, a third party analysis said that the stores paid different prices for some goods and where that happens, the combined group would try to move both to the lower price.

Mammoth task

Does that mean that customers will pay the same price in both stores for the same product? Not necessarily says Coupe.

He conceded that the stores' brands are different and appeal to different customers - precisely why they are going to keep them running side by side. How shoppers at Sainsbury's will respond to the prospect of being charged more for the same item than Asda customers will be interesting to watch.

To integrate these two businesses will be a mammoth task - which will involve migrating Asda logistical processes onto Sainsbury's systems. A commitment not to cut in-store jobs still leaves jobs in other functions vulnerable if the company is to hit its target of cutting £500m pounds in costs. Its hard to imagine that the tie-up won't see cuts in buying, logistics and head office functions.

There is still a long way to go before this ambitious deal is done. Even if competition watchdogs give it the green light, Mike Coupe doesn't expect the deal to be sealed until 2019.