Sainsburys footfall

Sainsburys footfall is falling short

Sainsburys has reported another slip in like for like sales which echoes the drop in market share of 0.2% points in the latest Kantar data.

This is not the Sainsburys we have come to know over the last few years, this is a new Sainsburys that is facing up to a resurgent Tesco and Morrisons. In the next 12 months Asda will also start to regain its footing, and Aldi are in fighting talk mode, standing by their pledge to be the lowest priced grocer.

Quite simply, Sainsburys footfall is falling short.

Sainsburys brand building marketing is admirable however what it is not doing is driving footfall into the stores and sales are flagging as a result. Typical footfall driving activity you would expect in UK grocers involves price and multi-deals and what is missing from Sainsburys marketing is price messages.

We are quickly approaching the most marketing-dependent sales period, Christmas, and while the Sainsburys marketing campaigns of the last few years have been acclaimed for their artistic merit, they have not delivered.

The Christmas ad will already have been signed off but we sincerely hope that this year it has product at its core. Not a cuddly cat, not a single bar of chocolate, a family Christmas meal that reinforces the brand and quality messages, but also gives us a really clear reason why we should go to Sainsburys for our Christmas food shopping this year.

The other opportunity to be grabbed over Christmas hangs on the clothing rails. In the past we have lambasted the TU clothing offer: poor merchandising, confusing communication and availability issues, and as yet we are still waiting for something to change.

The addition of a TU Premium range shows commitment, but the success of a range does not begin and end with good design and buying. It must be deliverable in store with processes and customer service to support it.  Attention to the in-store execution of TU clothing could give Sainsburys a very welcome margin boost.

We fear that the Argos takeover has distracted the leadership team from the core business of grocery retailing. Our next concern is that the plans to increase the number of supermarkets with an Argos concession before Christmas will now distract the retail teams.

Of course a £1.4bn purchase will be distracting and the pressure to ensure that it delivers a return will be immense. However, at what cost to the core business?

Sainsburys has huge brand equity but it is value-less without footfall to drive volume and sales. The challenge to convert that equity into sales in on. There are opportunities to be had, but speed is key. Our advice, keep it simple Sainsburys. Don’t keep adding little twists. If the main ingredients aren’t right, no amount of little twists will help.

next facia

For the good of the long term strategy

When profits are falling you could be forgiven for looking for quick fixes. But taking your eye off the long term strategy is where trouble lies. Step forward Next and John Lewis.

Yes, Next and John Lewis have reported weakening profits making headlines in retail press, and shaking city prices, their figures a barometer for general merchandise retailing, a guide to consumer confidence and an indicator of what a post-Brexit economy could look like. However while many frown at he short term outlook, we smile at the long-term growth potential.

After a profit impaired 6 months of trading Next outline plans to accelerate store opening plans; counter-intuitive as Lord Wolfson admits himself. John Lewis profits have also been hit but they too are looking longer term, investing in price, customer service and staff pay.

Both businesses are positioning themselves for when current economic pressures are lifted, positioning themselves for growth.

It’s tough out there and when it gets tough, most businesses’ outlook shortens and you look to the financial year end and not too much further.  Price cuts to increase volume and revenue, job losses to reduce costs, and then what? There is only so much fat to trim before you start cutting into muscle.

Next are talking about price increases to protect margin, their numbers indicating a drop in volume from higher prices is better for profit than a margin cut. John Lewis are talking about fewer partners, but ones who contribute more to the business. Both strategies indicative of a ‘more from less’ approach, be clever about how you use our assets.

While much noise is made about falling profits, it is refreshing for us to see the confidence these businesses have in their strategy and the purposeful way it is communicated. While markets may rock in the short term, long term is where the returns lie.


For advice about your long term strategy and how Retail Remedy can help you plan in the short term for long term growth, please get in touch.

 

Sports direct peterborough

Sports Direct, a soap opera with a happy ending?

Sports Direct is turning into a soap opera, another story to tarnish the retailing industry. From the reports we have read, the Sports Direct AGM this week was a culmination of badly timed PR stunts, hot air and bluster.

The Chairman Keith Hellawell, offered to resign, was asked to stay, was given a vote of no confidence and then offered to leave in a year if he was still doubted.  This is symptomatic of a business that is in turmoil and what is needed above all else is strong, fair and consistent leadership. What is missing at Sports Direct of course is strong, fair and consistent leadership.

In principle the proposition is sound, buying up brands and end of lines at a heavily discounted cost and offering them at very competitive prices in a no frills environment. Perfect for the target customer. In reality many of the brands are tertiary, the savings feel arbitrary and the stores are confusing enough to bring on migraines.

sports direct in store chaos

So where does Sports Direct go from here?

During the open day, journalists were invited to walk through part of the warehousing facility. It was explained that they had seen only a fraction of it and it might require a staff member to walk a mile to pick one item for a website order. Based on that, we would suggest one direction Sports Direct could go is automated picking.

In their plans is the statement that they want to be the Selfridges of sports retailing. Never say never but there are probably only a couple of people that believe that is possible as the business stands today and those people are on the board. It will take more than a wad of £50 notes, Mr Ashley.

sports direct email

Sports Direct online is another story: email campaigns that attract attention with quality images and brands; rolling offers that convey a sense of urgency to buy today and faultless home delivery. The downside is the negative PR that will undoubtedly affect sales online.

Online, ranges can be collated in multiple ways. For instance, a customer can shop by brand, by product type or by sport which effectively presents the customer with lists that are easy to navigate.

Sports Direct Nike wall

In store it is altogether more complex: by brand within a product group within the football locker. It’s sensible but is challenging to communicate and is only executed well in part.

Sports direct range confusion

At the moment customers might be feeling resentful that they are shopping at Sports Direct, supporting unfair working practices, and without change the real danger is that they will go elsewhere. If Sports Direct don’t sort it out, they will be opening the door for other retailers.

With change, with a move towards an instore experience that echoes the ecommerce experience, with better working practices and with auto-picking, Sports Direct are a force to be reckoned with.

Can’t wait for the next episode.

Introducing Amazon Dash

Can the grocers compete with Amazon?

Amazon Dash, another weapon in Amazon’s armoury to steal market share from the Grocers adding to Prime and Fresh and seemingly creating an impenetrable wall. Can the grocers compete? Should the grocer compete?

Dash on its own, in its current format will not even make a dent. However what it is doing is a remarkable job on brand awareness for Amazon itself who will be the biggest winner and for the brands represented by Dash. (How many photos have you seen in the press of an Ariel Dash button?)

Amazon Dash Ariel Button

It’s a marketing gimmick. How many people take up the buttons and dot them around their houses is almost irrelevant. What is relevant is that Amazon are shouting loudly that they are serious about grocery and have the coffers to weather any storms that might come their way.

Amazon will not convert supermarket shoppers into Prime customers outright. They may encourage some to add Prime to their shopping channel portfolio and use Fresh but the supermarket will still be their grocery shopping channel.

The more interesting battle field is the online grocery market. At the thinner end of the online grocery market share chart there are retailers with smaller share and slimmer margins that can’t afford to lose any of their slice to Amazon.

Amazon Dash Andrex Button

As with all things in grocery, we know that fighting head on does nothing except tick a box and weaken the core offer. Matching prices erodes margins, limits customer abandonment temporarily, but does not grow sales. Adding faster and cheaper delivery options adds cost and complexity but does not grow sales.

What does grow sales is a quality offer in an interesting and inspiring environment at a price that the customer deems as good value for money.

It sounds so simple doesn’t it?

So to answer our own question, yes the grocers can compete with Amazon, but on their own terms, not by replicating the Amazon offer (at a higher cost to themselves than Amazon).

Play your own game, do what you are good at, innovate not imitate.