Decision time for Sainsburys

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Sainsburys lacks dynamism

The last year has not followed the path of the previous 10 for Sainsburys. With the departure of Justin King came the anticipated departure of a wave of customers, culminating in the 2.1 percent like for like sales decline of today’s Quarter 1 trading update. Although expected, it won’t be sitting well for Mike Coupe, or his city backers who will be looking for a plan to return the business to growth.

We’ve had decisive action from Morrisons with the arrival of Dave Potts the new CEO and a new wave of price cuts earlier this week. We’ve had Tesco cuts jobs, prices and waste, designed to save costs, protect margin where it can and appeal to the discounter audience where price is the key criteria on which purchase decisions are made.

But as yet, we have not seen anything quite so decisive from Sainsburys.

We see three areas of opportunity for Sainsburys:

  1. The Sainsburys brand has an excellent reputation for values, fair trade and is already associated with causes close to the nation’s heart but, simply put, it isn’t marketed well and is not pulling the customer into stores. Sainsburys desperately needs footfall and a memorable marketing campaign can do that. What was the last Sainsburys advert you can recall? If it was the Christmas WW1 advert then that pretty much sums up the problem. Lidl are the biggest media spenders in UK grocery at the moment and it shows in its market share. Sainsburys must invest in its marketing, and the power of its brand, to keep it top of mind.
  2. Sainsburys Tu Clothing launched online recently to select customers with a full launch expected imminently. Online the range looks strong, fashionable, very well priced and presented in inspiring outfits. In store however it looks like an afterthought: the merchandising is lazy and often obstructed by sale rails.
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    Inconsistent merchandising of Tu clothing

    Some of the design credentials from the clothing should be translated into in-store presentation to generate interest outside of the frequent 25% off events.

  3. Finally, the need to compete on price is ever more pressing. Our recent Sainsburys walk through with execs and PR did little to address the issue. Sainsburys has more to lose when Tesco resurges as it faces Tesco with more of its stores than any other grocer. In the meantime Aldi and Lidl have considerable headroom in terms of postcode penetration and basket size. A good response to its simple pricing initiative is desperately needed.

sainsburys great offers

We will eagerly await decisions and strategic choices that do more than just follow the crowd because following will not be enough when Tesco and Morrisons are fighting so hard. Add Asda on a mission too and the landscape is only going to get more threatening for Sainsburys.

With supermarket sales predicted to fall over the next 5 years according to IGD, Sainsburys must make some hard hitting decisions and work out how to stand apart from the pack or it will find itself scrapping over leftovers.