Argos, together with sister business Habitat, is owned by J Sainsbury
Argos and Habitat owner J Sainsbury today confirmed it plans to merge with Asda, creating a £51 billion retail group.

This deal — should it gain antitrust approval — will obviously have major implications for the grocery sector, creating a business to rival Tesco with roughly a third market share.

But its ramifications will also be felt in the furniture sector.

Asda has arguably been the punchiest of the grocers in terms of its approach to furniture, at times going in big on furnishings in the past.

Today, it retails a line of inexpensive home furnishings on its website, badged under its George brand, and through around three dozen Asda Living stores dotted around the UK.

By contrast, Sainsbury's has in the main shown less interest in the furniture sector, lagging behind both Tesco and Asda in this regard.

That changed with its acquisition of Argos, which at a stroke made the group one of the biggest retailers of furniture in the UK. It also acquired Habitat as part of that deal.

In the period since, it has been integrating both the Argos and Habitat fascias into its grocery stores, by way of the introduction of mini-stores of a few hundred square feet apiece.

A combined Sainsbury's Asda would likely see this strategy rolled out into Asda stores too, with Argos to feature additionally in the latter, and not just in Sainsbury's stores like at present. This would surely lead to the closure of even more standalone Argos stores as leases expire.

It could also follow suit with Habitat, though the more conservative approach Sainsbury's has taken with the rollout of this brand — it today operates from just 16 sites including a handful of standalone units — suggests it remains very much in pilot mode with the Habitat brand.

It will also likely lead to the introduction of the George brand — in both apparel and home products — into fascia currently operated by Sainsbury's. The Tu clothing line, operated by Sainsbury's, has already begun selling via Argos channels, and could feasibly find a new distribution outlet through Asda.

As with all takeovers and mergers, the combined business will look to eliminate duplication. This will impact people and centralised functions the most, but would also have an impact on product ranges.

In terms of percentage sales for the merged business, furniture will be a peripheral category. However, it will still be a sizeable one in monetary terms. It is feasible, perhaps even likely, that the combined operation could merge and consolidate the home furnishings offer of the two, with the likely exception of Habitat.

That would have a knock-on effect on the supply chain, impacting both sourcing offices around the world and manufacturers of furniture and home products.

But, before anything happens, the proposed merger faces a long wait for regulatory clearance from the Competition and Markets Authority (CMA). Time for all involved — from suppliers to employees — to examine closely the likely impact on their own businesses and careers.

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