‘The best way to predict the future is to create it’.
Little did Abraham Lincoln know when he coined this immortal phrase in 1865 that across the pond, unknown shopkeeper John James Sainsbury was about to do just that.
Sainsburys may be fast approaching their 150th Birthday, but they’re showing no signs of fading into old age. In fact, they are arguably more future-facing than ever.
And, although Lincoln may not have been on the 1,500-strong delegate list at this month’s IGD Trade Briefing, Commercial Director Paul Mills-Hicks ensured that his spirit resounded throughout the room.
‘History teaches us to focus on you’, Mills-Hicks asserted, ‘not what competitors are doing, or what everyone else is doing’.
Sainsbury’s have been making seismic business changes within the past quarter alone. Buying up Nectar. Culling their personnel. And now the merger-that-must-not-be-named.
Has the quest for success gone to the head of CEO Mike ‘we’re in the money’ Coupe?
‘Our strategy hasn’t changed in 4 years’, he avowed, ‘and now we’re closer to realising our ambition of reaching Destination Sainsburys than ever before’.
So what exactly does ‘Destination Sainsbury’s’ mean?
Blue Chip Head of Planning, Kimberley Upton, has had the chance to sleep on it, and here’s what you need to know:
Great products and services at great prices
By making it easier and simpler for people to shop commodity groceries, Sainsbury’s can invest in growing the services that shoppers want. All the signs point to growth coming from beyond the realms of a differentiated FMCG proposition.
GM is growing ahead of a challenging market. Clothing has made significant category- and channel-specific gains, triggering investment in the recent launches of TU Premium and TU Formal Ranges. And as the death knell tolls for High Street banks across the country, Sainsburys Bank continues to diversify and show positive signs of growth – with ATM estate up 5%; travel money up 26% and insurance up by c. 40%.
Being there for their customers
Sainsbury’s are committed to serving customers whenever, wherever and however they want. The fundamental needs of shoppers don’t change over time – they want choice (help me to find the products that I want to buy) and time (don’t make me spend more time than I need to). But transformative technologies will be the enabler to meeting these fundamental expectations in new and interesting ways.
Advanced customer intelligence through their 20m strong Nectar base will enable Sainsbury’s to tailor ranging and merchandising to store catchment – acknowledging, for example, that us Northerners prefer custard with our puds to cream, and therefore intelligently planning / investing in space where it’s needed most. It’s personalised service on shoppers’ own terms.
Thanks to Sainsbury’s, 40% of the population can now access same day delivery in 100+ stores; with Chop Chop 1 hour delivery now covering Zones 1 & 2, giving London shoppers access to 20 grocery essentials at just a moment’s notice.
Unlocking unmet needs will be game-changing in leading the store format revolution. The IGD predicts that the store of the future will serve multiple missions in a way that’s on trend, personalised, and provides fun and enjoyment – and Sainsburys above all others is heading in the direction to lead this change.
Colleagues that make a difference
Sainsbury’s are committed to being a ‘great place to work’. A difficult sentiment to swallow, when the axe is being wielded at store level, and they’re being criticised over new ‘dogsbody’ contracts.
But Coupe insists it’s not about sacrificing, but simplifying. They’ve just been awarded Grocer Gold ‘Best for Service’ – an accolade that they’re rightly proud of – and they’re about to embark on their biggest ever staff omnibus to give their colleagues a voice in the direction in which they’re heading, and ultimately influence their customer net promoter score.
And what of the ‘big green elephant with the Yorkshire accent’?
It was no accident that ASDA was not mentioned by name in the 8 hours that I was in the company of Sainsbury’s.
‘It’s the job of 20 people to focus on that [merger]’, Coupe dismissed. All remaining colleagues will be focused on BAU, doing the do and helping us to realise our ambition of Destination Sainsbury’s’.
ASDA appear to be nothing more than a passenger in the retailer’s grand plans. The biggest question is who else Sainsbury’s will be taking along for the ride, and who won’t be part of their future.
‘Value Simplicity’ and the great brand backlash
Last year, Sainsbury’s were controversially accused of using the IGD Trade Briefing as a platform to declare war on brands. 12 months later, and although their sentiment has softened, the principles are the same.
Not everyone will be invited on the journey to Destination Sainsbury’s.
They need space to realise their vision, which necessitates a need to claw back their retail estate from brands in residence. 2018 will see a nationwide range rationalisation which promises to cull up to 40% of commodity brands. And by commodity, we’re not talking toilet rolls but major household staples and long-established brand names.
In the past year alone there’s been 128 range reviews covering 60% of food sales. Shoppers want differentiation, and big brands will be sacrificed in favour of emerging equity brands. And once they’ve reached critical mass, they’ll be introducing more concessions into stores – step forward 1869 Coffee, Ben & Jerry’s, Sushi Gourmet to name just a few.
The picture for brands is a bleak one.
‘Brand owners have driven zero growth for us in 2 years’.
‘Cutting back promotions has had NO negative impact on volume shifted’.
‘We’ve reduced available secondary space by over 10%, and we’re STILL pulling in c. £4.5m in incremental sales’.
So, in their bid to become the UK’s go-to retailer, it may not be their competitors that are the most at risk of losing out, but their longstanding allies – the brands themselves. Far from being over, the fight with brands is very much on.
But there’s still time to get back in the driving seat. We have a proven track record in activating some of the UK’s most established & best-loved brands in retail, and we have Destination Sainsbury’s firmly in our sights.
If you’re a brand looking to make love not war with Sainsbury’s in 2018, get in touch as we’d love to help.