The merger, which was confirmed on Monday 30 April, will mark a "pivotal moment for the British grocery market", giving both stores nearly one third of the entire market share, according to Kantar Worldpanel's retail analyst Fraser McKevitt.
The deal, announced yesterday, is expected to face thorough scrutiny by the Competition and Markets Authority, which could force the chains to sell some of their stores before giving them the green light to merge.
SAINSBURY'S and Asda parent firm Walmart have sent shockwaves through the grocery industry with a proposed merger that could create the largest supermarket business in the UK. Tesco in particular performed strongly, growing sales by 2.1 percent and recording growth of more than two percent for the twelfth consecutive period, marking the first time the retailer has achieved this since March 2011.
The combination expects to lower prices by 10% on products that customers purchase regularly.
The move underscores the intense competition in Britain's grocery market as discounters take market share from traditional chains such as Sainsbury's and Tesco.More news: US Inflation Hits Federal Reserve's 2% Target in March
"This is a transformational opportunity to create a new force in United Kingdom retail", Sainsbury's CEO Mike Coupe said.
However, Nielsen found that Asda's sales momentum continued, having the most improved year-on-year performance of the top four supermarkets with sales up 2.3%.
Walmart announced yesterday that it is selling its United Kingdom supermarket business Asda in a $10 billion deal.
Mr Watkins said: "Both retailers have over half of all households as shoppers every 12 weeks, while over three-quarters also visit Tesco".
"Given the competitive landscape in United Kingdom grocery retail, profitable growth and expansion opportunities are limited, so reducing resources makes sense especially when there are other geographies and channels" with more opportunity for growth, said Moody's Lead Retail Analyst Charlie O'Shea.