RETAILERS ARE continuing to feel the strain as fresh rumours of a bid for Sainsbury, surfaced last week and Somerfield emerged as a target for Iceland‘s owners.

Reports circulated of a potential American bidder for Sainsbury, even as the ailing supermarket giant pushed through measures to stretch terms on paying suppliers.

Meanwhile, Somerfield, which accounts for some 5.5% of UK grocery sales, is the object of a bid from Icelandic investors worth over £1bn.

Baugur Group already owns 5% of the company but is looking to acquire the rest of the business with an offer of 190p per share.

Baugur also agreed in December to buy Iceland and wholesalers Booker and Woodward under the Big Food Group banner.

And under the Somerfield deal it would also net Kwik-Save, cornering nearly 8% of total British retail sales, according to the NFU‘s Terry Jones.

“We‘re wary of any consolidation down the supply chain because it concentrates the market in fewer hands, and that’s a bad thing,” he said.

“But if you look at Somerfield, it‘s going to complement Iceland well, as its fresh offering is pretty limited and Somerfield‘s is good.

“It means that business will become stronger, and should provide competition for the big four.”

The combined buying power at Baugur could help produce push down wholesale prices at Booker and Woodward, which would help independent retailers, added Mr Jones.