Quarter 4 has historically been weaker for Sainsburys against its competitors, trading better in summer months than winter, however the trend has been improving with each quarter of this financial year and today did not disappoint.
Like for like sales are improved from Q3 and shows Sainsburys strength and ability to retain the increasingly promiscuous customer. This is in part due to the cracks in Tesco and Asda’s performance recently but the achievement to hold its position against the discounters should not be taken away from the strong leadership at Sainsburys.
This puts the grocer in a strong position to increase its bid for Argos and we doubt we will be disappointed by the deadline at the end of the week. However we are not yet convinced an increased bid of £1.5bn will be enough to secure a win against its rival bidder Steinhoff.
The advantages of a Sainsburys owned Argos have been spelled out by Coupe but there is a real risk that this could become too much of a distraction to the day to day business of serving and retaining the customer. While the last 2 years have proved Sainsburys is a confident and objectively led business, it is the next two years that will see them earn their corn.
And if Sainsburys is unsuccessful with its bid, what is plan B?
Sainsburys can tick the box for online and convenience retailing, the two high growth aspects of grocery in the UK, but that does not solve the problem of big boxes with a space issue. General merchandise, and we include clothing in that, is lacking. Looking at the range we can see that the buyers can source a good product at a good price. It is the in store execution that lacks conviction and consistency. If the Argos bid fails, Sainsburys must finally grasp the margin rich opportunity of TU in store and not leave money on the shop floor. It’s not as if Sainsburys doesn’t have the capability, it does, so when will this be addressed?
The next financial year could see Sainsburys move up another gear, all the signs are there: quality, price and promotional positioning. Sainsburys just needs to maintain its steady strategic path. Oh, and please sort out clothing in store.