Mapmechanics consultancy provides location-based market insight into retail merger

With Tesco announcing their £3.7bn merger with wholesale food seller Booker in late January, hedge funds and investment banks are now moving to take advantage of locational analysis to establish the financial impact of the proposed merger.

The merger will result in Tesco’s share of the convenience store market increase to 28% and as with any intended merger of this size, the Competitive Markets Authority (CMA) is investigating the deal and using geographic analysis to help inform their decision.

The Mapmechanics Consultancy team are able to replicate the types of geographic analysis that the CMA will carry out in advance, revealing the business and trading landscape of both parties. We are able to examine the locations of convenience stores owned by Tesco Group, Booker Group and the competition, analysing the geographical makeup of these to produce a series of statistics and insights that reveal the extent of the competition in the convenience store market.

This is crucial information for hedge funds and investment banks worldwide, indicating the possible consolidation of retail estates following the CMA’s official decision. This type of Locational Analytics is becoming more prevalent for institutional investors to gain a strategic advantage and can help with current and future investment strategies.

Locational Analytics was used by the CMA in the Ladbrokes-Coral merger to understand market saturation in given geographic areas. In addition, the Office of Fair Trading (OFT) used geographic insight to help adjudicate on the Costcutter-Mace merger.

Using the geographical analysis strategy [‘crow flies’ (straight line) distances] used by the CMA for Ladbrokes-Coral, the headline findings for Tesco-Booker are that:

5 minute drive time catchment from Tesco in Aberdare, Mid Glamorgan

5 minute drive time catchment from Tesco in Aberdare, Mid Glamorgan – Tap or Click image to enlarge

  • 2,192 Tesco Convenience stores (63% of all Tesco Convenience stores) are within 1 mile of a Booker Group brand store
  • Within 1 mile of Tesco Convenience stores, Booker Group brand stores currently make up 18% of the market (leaving 82% with the rest of the competition)
  • There are a number of Tesco store locations where Booker Group brand stores are the only market presence within 1 mile and an even greater number of locations where this true within half a mile

Alternatively, using the analytical approach taken by the Office of Fair Trading (OFT) in the case of the Costcutter-Mace merger [utilising drive-time catchments between retail outlets], for Tesco-Booker we identified that:

  • There are zero Tesco Convenience stores where a Booker Group brand store makes up the only competition within 5 minutes drive
  • There are a number of Tesco stores that only have limited competition (less than 2 competitors) within 5 minutes drive.

The above headline results show just two differing analytical approaches to answering the competition question. Of course, by changing the distance or drive-time used in the research, the results will differ. Our full geographical findings can be acquired by contacting the Mapmechanics team.

In addition to our consultancy service, Mapmechanics assembles, configures, formats and distributes a wide range of data and digital map products for use within Equity Research as well as advanced geographic business intelligence (GeoBI) and geodemographic information that can assist you to more accurately inform your next investment decision. To find out more about how we can enhance your research, call +44 (0)20 8568 7000 (UK) or email us at