In its first major strategy update since it was barred from buying Asda, Sainsbury's has announced several actions to strengthen its business and unveiled six priorities that will frame its strategy:
1. Be more competitive on price
Sainsbury's is stepping up actions to boost its appeal with value seeking customers by introducing more entry price point (EPP) 'owned brands' and highlighting price reductions through its Price Lockdown campaign. Following the launch of the budget J. James meat range earlier this year, Sainsbury's now has 120 EPP lines and this will rise to 200 by the end of the year. The Price Lockdowns, focused on high volume categories, are designed to build Sainsbury's value credentials, with publicity running for eight weeks on featured lines to boost customer trust in pricing and drive shopping frequency. At the same time Sainsbury's will limit the number of promotions it runs.
2. Offer distinctive products and new categories
Sainsbury's will focus more on growing incremental sales of new and exclusive brands, such as its Future Brands range of niche brands. This range has now achieved sales of £200m (without cannibalising the sales of other brands). This activity will be complemented by a drive to finish the review of its entire range: reducing its SKU count, sharpening prices and growing volumes by better aligning products with customer missions. Sainsbury's is also keen to develop category opportunities, with beauty, wellness and foodservice already showing promise as new footfall drivers that have a wider halo effect on the sales of established categories.
3. Making shopping convenient, supported by great service
Sainsbury's will invest in its supermarkets to improve customer satisfaction. New technology will be key to boosting store standards, for instance by automating in-store processes, freeing up staff time to focus on customer service. 250 supermarkets and 200 convenience stores will receive investment this year, which will be targeted at areas that customers care most about.
4. Drive efficiency to invest in the customer offer
Sainsbury's will also evolve its store estate, opening c. 10 new supermarkets and 110 new Sainsbury's Locals will open but it will also close 10-15 older supermarkets and 30-40 convenience stores over the next five years. 90 more Argos stores will open in Sainsbury's supermarkets while 60-70 standalone stores will close. With less focus on new stores, Sainsbury's will turn its attention to smaller scale investments at existing stores to boost their appeal with local shoppers. A new target has also been set to reduce costs by £500m over five years, by bringing its businesses closer together.
5. Grow connected services
Nectar will have a bigger role in Sainsbury's future. A digitised Nectar scheme is about to launch following extensive testing in the Isle of Wight and Wales. This opens the possibility of location specific personalised promotions as customers move around a store, creating new opportunities for suppliers. Sainsbury's is also refocusing its banking business, pulling out of the mortgage market and instead concentrating on simple, mobile-led financial products.
6. Provide a seamless experience
Following investments in its digital platform and capabilities, Sainsbury's will now integrate its physical and digital platforms more fully to make its total proposition easier for customers to access. One example of this is connected search, making products across Sainsbury's and Argos discoverable through Google or Alexa and with customers then able to build a single basket and benefit from flexible fulfilment options.
Sainsbury's has also released a second quarter trading statement. Trading improved across all areas of the business and grocery sales grew by 0.6%.
Sainsbury's food commercial director, Paul Mills-Hicks will be one of the key speakers at IGD Live:
IGD Live combines best practice and commercial insights on digital commerce, convenience, food-to-go, wholesale and category management, with ground breaking keynote presentations from industry leaders
6-7 November, London
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