Tesco’s announcement that it intends to buy Booker could prove to be the food and drink retailing sector’s Brexit or Donald Trump moment. The high-ups in each business would have known it was coming, of course, but for the rest of us it was certainly something of a bolt from the blue – and for many in the mainstream drinks retailing arena it has the potential to prove as transformative as the two big political events that promise to reshape the world we live in.

Tesco said in its statement outlining plans for the £3.7 billion acquisition that it would “help independent retailers,
caterers and small
businesses by
further improving choice, price and service”.

Quite whether all independents will see this in the same way is a moot point. Being the customer of a wholesaler or a franchisee within an organisation with enhanced buying and distribution power could, on the face of it, bring better prices and access to a wider range of products.

But there will be plenty who equally feel uneasy about being part of a distribution network where
the biggest grocery retailer in the country, with stores in high street, neighbourhood and out-of-town locations, is pulling the strings.

Is a convenience store operating under Booker’s Premier or Family Shopper fascias really going to feel that its chief supplier has its interests at heart now it’s owned by Tesco, having previously had to swallow Booker itself buying the competing Budgens and Londis retail names?

The deal potentially brings together Tesco’s 2,900 Express, Metro and One Stop convenience stores with 5,400 independent Booker fascias, providing that the competition authorities don’t force any to be sold o to allow the deal’s completion.

The Times speculated that 635 Tesco stores could face a forced sell-off as they were fewer
than 500m
from Booker fascia stores, with branches in Reading, Nottingham and Croydon among those on the hitlist.

Booker serves 120,000 independent retailers in all, taking into account its cash and carry customer base.

Chief executive Charles Wilson admitted “it will take a bit persuasion” to win over some retailers but he thought they would ultimately be “excited” by the deal.

He added: “He’s seeing his rates go up, he’s seeing his national living wage going up, he’s seeing quite a lot of cost pressure coming into his business.

“So what he is looking for is: how do I get better choice, better price and better service out of suppliers such as Booker?

“We really think we’ve made good progress in the past 10 years. You’ve seen satisfaction go up, sales to retailers grow strongly, but they need more. Whether it’s a Premier, a Londis, a Budgens or Family Shopper, we’re convinced that, with the capabilities Tesco brings, we’ll be able to do a better service and a better job for them.

“That will help them grow, help them prosper and in five years’ time I think they’ll be saying this was a great deal for them.”


Tesco chief executive Dave Lewis added: “Booker has been fantastic at serving independent retailers very well indeed, and we think that by coming together we’ll be able to build further on that offer, and therefore independent retailers get a better deal here than perhaps they do on a standalone basis.”

Wilson has begun a series of meetings to explain the merger proposition to Premier retailers and some have been won over.

Shahid Razzaq, independent operator of the award-winning Mo’s Premier shop in Blantyre, Glasgow, and the nearby Family Shopper, says he is all in favour of the deal. “We had a meeting with Charles Wilson and his team and he answered every question that was put to him. Fair play to the man.”

“It will open up the market, especially in areas such as fresh and chilled, to allow us to match Nisa and Spar. It should help us improve our margins too. I can’t see any issues.”

Linda Williams, co-owner of the Premier Broadway Convenience Store in Oxgangs, Edinburgh, was at the same meeting. “Initially I was quite alarmed [by the announcement],” she says, “but I think it could be a positive thing.

“I attended the roadshow and he was quite open, answered questions for at least an hour-and-a-half and gave us a shortened version of the presentation he’d made to Booker and Tesco shareholders.

“He said what retailers had been telling him for some time was
that our promotions needed to be sharper and margins needed to be better and the only way to get that was to go bigger.

“Costs are the biggest factor for small businesses so we desperately need more margin. One big concern is bank charges and Tesco owns a bank, so you don’t need to be a brain surgeon to realise that there could be bene ts there.

“Tesco is also streets ahead of us in technology, which hopefully will bring advantages to independents as well eventually.”

But some Booker group independents are still waiting to hear the detail of the deal.

Jayesh Patel at Westholme Stores, in Goring-on-Thames, Oxfordshire, says he is open to hearing what the company had to say but has serious reservations. “When I looked at the proposal it said buying power will increase but I can’t really see that being passed on to independent retailers,” he says. “They might persuade a company such as Coca- Cola to give an extra penny discount but I can’t see that being passed on to us. It’s more likely to go to the shareholders or to Tesco itself. Those pennies will add up to a lot for them.

“My biggest seller is multipacks of beer and we used to get good prices with Musgrave [the Londis owner bought by Booker in 2015], but when it went to Booker bottled beer prices went up. But I’m hoping that we might get some better deals soon.

“When Booker took over Londis it got rid of the Super Value brand and replaced it with Happy Shopper [the Booker-exclusive label available to both symbol group and cash
and carry customers], but that
just means we have the same
brand as all the Premier stores and independents. We don’t have any identity as a Londis.

“One of the things I’m dreading is it abolishing Happy Shopper and bringing in the Tesco brand.”

Patel says he has also gauged resistance to the merger from customers. “We have quite lot of people coming into the shop who say they hate Tesco and they fear the merger will make suppliers unhappy and that it will squeeze the farmers.”

James Lowman, chief executive of the Association of Convenience Stores, says the merger was recognition by Tesco of the strength of the sector.

“Ten years ago, pundits
were forecasting the demise of independent retailers at the hands of big competitors such as Tesco, so the decision by Tesco to invest in supplying those same retailers shows that the independent sector is highly relevant and sustainable.”


Whatever safeguards are put in place to protect Booker symbol group independents, the deal still has the potential to make business tougher for those independents who aren’t a direct part of that infrastructure.

Harsha Wickremasinghe, associate at mergers and acquisitions advisory firm Livingstone Partners, sees Tesco as gaining most from the deal.

“Securing such a deal at a time when consumer shopping habits continue to evolve away from larger, weekly shops towards more frequent top-up shops at local stores and online is a strong move that should cement Tesco’s dominance in small format grocery retailing,” he says.

“In light of the structural changes facing the sector, such as the shift to convenience and growth in the eating out market, it wants a slice of the broader pie to secure its long-term strategy.

“The jury is out as to whether
the timing of the deal is right, but
if it does pull it off, this could be
the trump card that flummoxes its rivals and makes Tesco back into the unassailable force it once was.”

The biggest obstacle could
yet come from the competition regulators though. “For all the excitement surrounding the deal, it will not be an easy ride from here on,” says Wickremasinghe.

“The biggest stumbling block
is the Competition & Markets Authority, which is undoubtedly salivating and plotting how it can steamroller this deal in the sake of consumers’ interests.

“We expect a significant vocal outburst from independent retailers and the broader wholesale sector regarding the possible impact to their businesses as a result of this deal.

“The objections will be strong, the investigations searching, and the battle to get this deal over the line could be brutal for everyone involved.”

It could be a process in keeping with these brutal times. Booker will be hoping that its own retailers can be brought into line – the sort of “it’s happening, just get on with it approach” that has infused the bigger issues of the day – and that Besco really does mean Besco.