Tesco-Booker merger could 'create a UK Amazon and save our High Street'

This article is brought to you by Retail Technology Review: Tesco-Booker merger could 'create a UK Amazon and save our High Street'.

The High Street as we know it is dying, says e-commerce delivery expert ParcelHero; but the Tesco-Booker merger would boost local stores, pubs and restaurants; and give Tesco a key logistics role outside the fiercely competitive supermarket industry.

The proposed merger between Britain's largest supermarket chain, Tesco, and its largest food wholesaler, Booker Group, may be audacious, says the e-commerce delivery specialist ParcelHero; but it could strengthen local stores and restaurants and help Tesco diversify out of the increasingly ruinous supermarket sector.

Says David Jinks MILT, Head of Consumer Research at ParcelHero, 'Our new report, 2030: The Death of the High Street reveals that UK weekly online shopping has reached £1Billion; and predicts home shopping will wipe out over 50% of town centre stores, spelling the end for many High Street supermarkets by 2030. The demise of the big weekly shop will leave large supermarkets white elephant inconvenience stores.'

Explains David: 'Tesco's clearly needs to diversify. Don't forget it was the first company ever to sell a product online in the world; back in 1984, and is the UK's second largest e-commerce retailer after Amazon. It makes £2.9bn a year online. But Tesco's High Street supermarkets are in a far less rosy position; and you could argue that its online success is at the expense of High Street shops, and cannibalise brick and mortar sales. Our report predicts High Street supermarket's market share will slump from 42% to 24% by 2030: and that's not enough to remain viable. Superstores rely on volume because of their small margins. Tesco needs access to new markets to continue to thrive.'

At the same time, ParcelHero's report reveals High Street shops, such as clothing stores, books shops and department stores are facing even tougher problems. The report predicts by 2030 ecommerce will account for at least 40% of all UK retail sales. In 2013 alone there was a net loss of 264 fashion stores from our High Street.

Says David: 'Unless something radical happens, town centres will become no-go areas after 6pm; full of nail bars, chicken shacks and charity stores. What we need is more homes being built in our High Streets to bring life back, supported by restaurants, convenience stores, specialist grocers and the like. And that's why the merger is good news. Booker supplies 450,000 caterers, 120,000 retailers and 700,000 small businesses including Wagamama, Rick Stein and Carluccio's. Tesco's enormous buying power could bring the benefit of these economies of scale to all these key High Street brands.'

ParcelHero believes this could be the shot in the arm these businesses need to grow and invest – and in turn encourage more people back to the High Street.

Concludes David: 'Amazon has long wished to be the conduit through which all things are bought; now Tesco could take on this role in the UK, becoming the logistics behind many High Street brands; giving it a finger in many distribution pies.'

It's a deal not without issues. Small shops that rely on Booker as wholesaler will worry Tesco could influence prices at wholesale level. But if the merger is allowed, and Tesco's and Booker's many High Street retail business customers truly co-operate; the parcel broker argues it could be the saving of the High Street.