Two recent stories have focussed in on how retailers can capitalise on the benefits of scale. A third – the merger of Darty and Fnac – has been commented on before.

Leroy Merlin is the main part of Groupe Adeo, the European market leader in DIY (see Mintel’s European Retail Rankings – December 2015) and it has been rumoured to be looking seriously at buying Homebase. This can’t be the first time because Homebase has been on its radar since before Sainsbury’s sold it in 2001. Groupe Adeo is a mix of wholly owned superstores (mainly Leroy Merlin) and voluntary groups, but it is the Leroy Merlin business which is the key.

Selex is one of the more ambitious Italian food retailers. In the latest full year, its turnover grew 11% to €9.85bn. It has been developing aggressively, mostly through acquisition – most recently of Il Gigante, a hypermarket group. Its challenge now is to absorb these acquisitions and make sense of them. This month it announced that it would open 69 new stores in 2016 and renovate 55 more. That may sound a lot, but Selex has 2,470 outlets in Italy, so even on a 10 year cycles it should be renovating 250pa.

Leroy Merlin's interest should not be too surprising. DIY is under pressure and losing out to trade demand in many countries – for reasons discussed at length in Mintel's DIY Retailing – UK, April 2015 report. Homebase is slimming down its estate, so what would be left for Leroy Merlin would be in much better shape and better able to cope with the competitive pressures in future. But the interest also suggests that Leroy Merlin has seen what Kingfisher is doing in rationalising ranges and unifying systems across its businesses and is impressed.

If Kingfisher is right, then there are major economies of scale available to DIY retailers which are not being realised yet, therefore Leroy Merlin could be a stronger company with Homebase than without.

There doesn’t seem to be the same underlying strategy to what Selex is doing. It is seeking size for the sake of it – market share as a trophy, perhaps.

The result is that it is looking an increasingly cumbersome group with stores ranging from "minimarkets" of 100 sq m through to 35 hypermarkets with an average size of 6,000 sq m. Building a business like this is the easy part, making it work is another matter altogether and much of the business is a franchised or voluntary group.

What the Italian food retailing scene needs is some major multiples, but the top three groups are all dominated by independent retailers, whether through franchising or through symbol group operations. The largest wholly owned business, Esselunga has a market share of just 5% (see Mintel's Supermarkets – Italy – November 2015).

Leroy Merlin is looking forward. It can see that size, if used properly, can give it a significant competitive edge and that will be critically important over the next couple of decades.

Selex is looking backwards, to a time when it was a good idea to build scale for the sake of it. But if Selex wants to do more than just build market share quickly, it needs to exert great control over its businesses, rationalise the number of fascias (the website lists 24 at present and there is a cash & carry business as well) and start to develop an online service. For a group put together as Selex has been, that is a huge challenge. In fact, opening more than a store a week is hardly the right way to go about it. Selex needs to pause and make the most of what it has first. It is not alone in having a mix of small and large stores – both Tesco and Carrefour have as well. But those two have fully integrated businesses which have taken years to build. There is no quick route to establishing a business like those.

We have criticised the Darty – Fnac deal on the same ground – that it looks back to a time when market share was seen as the end in its own right. Electricals retailing is changing fast and the Darty Fnac deal might actually make it more difficult to respond to those changes.

There is no point in chasing market share for the sake of it. We’ve seen too many companies come to grief (or almost do so) after an ill-considered acquisition spree (Dee Corporation, Asda and even Metro spring to mind).

Growth through acquisition if it is part of a well-considered long term strategy based on a view of how the market will develop. For us Dixons – Carphone Warehouse is a good example and Leroy merlin – Homebase could be as well. But if it is just building market share for the sake of it then the only likely beneficiaries are the advisors to the deals. For us Darty Fnac comes into that category and there’s a risk that Selex will as well.