Sainsbury's: how 2012 success will shape future direction

Date : 06 June 2013

As Sainsbury's releases its annual report, we've reviewed the full report to share our key highlights about the retailer's development over the past year and its outlook ahead.

1 Continuing focus on "Great Food"
Fresh food excellence is at the heart of the Sainsbury's proposition, underpinned by Sainsbury's strong reputation for ethics and support for British agriculture. Having completed the three year launch of the by Sainsbury's brand, Sainsbury's now has a fully renewed private label offer that is delivering strong sales growth and accounts for half of all food sales. The investment that Sainsbury's has made in private label over recent years is one factor that has helped it to communicate its points of difference and sustain strong overall like-for-like growth for such a long time, now running at 33 successive quarters. With benefits still to feed through from these initiatives, this provides a strong basis for further growth for Sainsbury's and aligned suppliers.

2 Growing fresh and the focus on British and ethical sourcing
Sainsbury's believes it accounts for £1 in every £5 spent on fresh fruit and vegetables in UK supermarkets, and has invested £40m in its 10 Development Groups for farmers and growers since 2006. The retailer spoke of the success in helping to change fish consumption habits through its "Switch the Fish" campaign, encouraging shoppers to try lesser known and more sustainable fish types. Separately, Sainbury's remains committed to doubling the amount of British food it sells by 2020, presenting new opportunities for growth for UK producers.

2 Investing in fast growth channels and services
Sainsbury's now delivers over 190,000 orders per week and is growing online sales by around 20% per year. As online grows in importance it is altering shoppers' relationships with Sainsbury's. They increasingly expect a seamless experience across Sainsbury's multiple channels including online and convenience. Sainsbury's has an extremely solid convenience business which it will expand further: by next year the retailer will operate more convenience stores than supermarkets. Shoppers can expect more use of digital technology in-store, building on Sainsbury's 'Mobile Scan & Go' trial, which allows shoppers to use their own smartphone to scan and pay for products. Both channels will become more important for Sainsbury's, but yet retain distinct dynamics and characteristics: suppliers need keep this front of mind when building trading strategies with the retailer.

2 Building strengths in general merchandise and clothing
With annual sales of over £1bn, general merchandise is now an important revenue stream for Sainsbury's. It is set for further robust growth as Sainsbury's introduces the offer to more stores and focuses on events and enhancing shoppers' in-store experience. The additional footfall that Sainsbury's increasing strength in general merchandise attracts has potential to drive business for food. It could open up new opportunities for cross-category promotions.

2 Value and efficiency will underpin growth: in-store and beyond
Sainsbury's remains committed to meeting the value and values requirements for its increasingly demanding shopper base. The retailer delivered £100m efficiency savings this year, the latest element of a five year programme that has saved £500m. Alongside this, Sainsbury's will look to drive new business in areas such as pharmacy, with 270 pharmacies now operational including three in hospital outpatients departments. This sits alongside the retailer's plans to add significant new space, with upcoming flagship developments including Fulham and Wandsworth Garratt Lane in London.

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