So, after fits and starts, the long-awaited consolidation of the supermarkets sector has begun.

So, after fits and starts, the long-awaited consolidation of the

supermarkets sector has begun.

The news that Somerfield and Kwik Save are to merge has caused the

retail analysts to work themselves up into a frenzy of anticipation

about economies of scale, reduced headcounts and enhanced buying and

distribution muscle.

It’s not as exciting a deal as the one mooted between Asda and Safeway

(which perhaps will be on again now), but it’ll do for starters.

The parties involved must decide on a market positioning for the new

chain. This is where it gets interesting. Is it going to be a mid-market

Somerfield or a downmarket Kwik Save? (I think we can presume upmarket

is out of the question.) On the basis that Somerfield is more upmarket

(or, if you prefer, less downmarket) than Kwik Save, will they meet

somewhere in the middle? Or, given the differing geographical profiles

of the pair, will they continue to run as separate brands? There may be

an argument for this but, if they do, then clearly some of the savings

will be lost, not least if any combined advertising budget (according to

AC Nielsen MEAL, Somerfield spends about pounds 15 million and Kwik Save

pounds 8 million) continues to be split between two brands. By combining

the spend behind one brand they can at least begin to match Asda and


If anything, one suspects the approach will be to focus the new

operation closer to the Somerfield brand. Not only is Somerfield likely

to be the dominant player, but it is also obvious that the Kwik Save

approach has not been working - as evidenced by its recent attempts to

introduce higher-margin products.

Now that it has dropped Lesley Joseph (hooray) and replaced her with the

hard-pressed Mum character, Somerfield has found a credible advertising

proposition and, moreover, one that is campaignable. It may be a case of

the tail wagging the dog, but when it comes to decide on the positioning

of the stores, those ads should influence the choice.

According to a survey conducted in the US last week by Leo Burnett,

consumers had difficulty picking out the official sponsors of the Winter

Olympics (McDonald’s, Visa, Coke, IBM) from non-sponsors (Nike, Pepsi

and AT&T). This confirms what many have long suspected: first, that when

it is so easy to organise product placement and ambush advertising,

official sponsorship is a waste of time; second, that when it comes to

sports and TV, the illusion of glamour remains such that a sponsor and

his money are too easily parted - even at dollars 40-50 million a pop.

Yet these giant global brands return time after time to the World Cup

and the Olympics.

One of the paradoxes of modern marketing is that, while clients demand

their agencies be accountable for spend in conventional media such as TV

and print (driving more and more agencies to defend themselves under the

cloak of ’media neutrality’), all such considerations go out of the

window at the first mention of sports sponsorship.