Sainsbury’s reveals an ambitious plan aimed at enhancing profitability by prioritising food, loyalty programmes, and convenience stores.
- Building on the past ‘Food First’ movement, the focus is now on extending the full food range across more stores.
- Investment plans include improving the Nectar loyalty scheme and boosting Argos’s in-store presence.
- Cost-saving measures aim to yield £1bn, funnelling resources into technological innovations.
- With sales recently up by 8.1%, the strategy seeks to fortify Sainsbury’s market position despite stiff competition.
Sainsbury’s has embarked on a new strategy known as ‘Next Level Sainsbury’s’, unveiled by CEO Simon Roberts. The aim is to enhance profitability by focusing on core areas such as food, the Nectar loyalty programme, and convenience offers, alongside ambitious cost-saving measures of £1bn. This new direction stems from momentum gained in the prior ‘Food First’ initiative.
Roberts acknowledges that solving pricing issues was key in the previous strategy, allowing further expansion of Sainsbury’s full food range to more stores. Currently, only 15% of its stores showcase the full range. Over the next three years, about 180 stores will be focused on achieving this expansion. This requires curtailing the general merchandise section to make room for expanded food offerings, a move heralded by independent retail commentator Nick Gladding as a low-risk profitability booster. This shift allows merchandise to be sold through Argos.
In a bid to develop a ‘world-leading loyalty platform’, Sainsbury’s focuses on enhancing the Nectar scheme. Previous successes attributed to ‘Nectar Prices’ during Christmas have prompted a review of how the platform operates. While acknowledged as effective, there is criticism that activation of offers is cumbersome compared to competitors. Simon Roberts intends to integrate these processes more seamlessly for customers, projecting significant profit increases from Nectar 360 operations.
Argos, another critical component, is set for transformation. Despite progress in making it more resilient, Roberts sees potential for growth. Currently, Argos attracts half the UK population but with limited frequency and purchase volume. Promote more frequent customer visits by enhancing the variety of products and bolstering the ‘click and collect’ and delivery services with digital infrastructure enhancements.
Sainsbury’s is committed to ‘saving and investing to win’ by cutting costs and investing in technological advancements to fuel future growth. These advancements include automation and AI tools for improved efficiency. Although this may potentially affect jobs, no specific plans for redundancies have been disclosed.
Sainsbury’s new strategy reflects strong growth ambitions, aiming to solidify its competitive position through targeted investments and operational enhancements.
