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.