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Management Strategies

07:17 PM
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Study: Consumers Say Mergers Offer Little Benefit

Of consumers surveyed by Accenture, 69% said banking acquisitions yield no benefits.

When it comes to the string of mega-mergers recently completed or still in the works, a survey released Thursday by Accenture reveals that most consumers don't expect to benefit. In fact, they anticipate higher prices and poorer service.

Accenture surveyed more than 1,000 consumers. Of that number, 54% said they don't believe they benefit from retail mega-mergers in particular while 42% said that such mergers result in higher prices, compared with only 24% who believe that mergers yield lower prices. Nearly one-third anticipate worse customer service, while just 23% said customer service improves.

Expectations are even worse when it comes to mergers from consumer-goods companies and banks. Some 58% of consumers said they don't benefit from mergers involving consumer-goods manufacturers, while 69% said banking acquisitions yield no benefits.

In the past few months, the retail and consumer-goods landscape has been dotted with huge mergers. Procter & Gamble is in heavy-duty integration mode following its $57 billion acquisition of Gillette Corp., announced in February. In March, Kmart Holding Corp. completed its $12.3 billion acquisition of Sears, Roebuck and Co., Federated Department Stores Inc. announced it would buy May Department Stores Co. in a deal valued at $17 billion, and Toys "R" Us agreed to a $6.6 billion buyout by a consortium of private-equity firms.

Add the apparent resolution this week of the bidding war between Verizon Communications Inc. and Qwest Communications International Inc. for MCI -- Verizon's $8.5 billion offer appears to have won -- and SBC Communications' pending $16 billion purchase of AT&T, and it's easy to see why consumers might be concerned. Huge mergers involve complex IT integration efforts, and often the trickiest part of those integrations is the marriage of two disparate customer-relationship-management systems

Still, it's not as if consumers see no potential positives from retail mega-mergers -- 53% said that such deals yield a wider array of products and services, and 47% said that more store locations result.

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