Supermarkets Sainsbury’s and Morrisons had news on their multichannel strategies as they reported to investors this week. Here are the highlights.
The Sainsbury’s figures and strategy
Sainsbury’s [IRDX RSBR] this week reported on a financial year in which it bought Argos [IRDX RARG], and its revenue figures rose accordingly. Group sales, excluding VAT but including fuel, hit £26.2bn in the year to March 11, 11.6% up on the same time last year, thanks to the acquisition. Like-for-like sales at Sainsbury’s, however, fell by 0.6% on the previous year. Pre-tax profits of £503m were 8.2% down on the £548m it reported last year. Sainsbury’s said its strategy was to create “a leading multichannel food, general merchandise, clothing and financial services retailer”. It sees online, where grocery sales were up by more than 8%, and convenience, which grew by more than 6%, as key channels in that. But it still expects the supermarket to be the key channel for sales: by year end it had 605 supermarkets and 806 convenience stores. Some 53% of general merchandise sales were made online. The pillars of a strategy first set out in November 2014 in the face of changing shopper behaviour are around knowing customers better, enabling them to shop wherever and whenever, prices, values,
Chief executive Mike Coupe said: “This has been a pivotal year and we have made significant progress delivering and accelerating our strategy. Sainsbury’s Group offers customers market-leading product choice, value and convenience, whenever and wherever they shop with us.
“Food is the core of our business and we are committed to helping customers live well for less. Our food business remains resilient in a challenging market and we continue to innovate in quality and to invest in price. We are also investing in growth areas of the business to meet the changing ways that customers shop. Sainsbury’s design-led general merchandise and clothing both outperformed the market and we saw strong growth in Sainsbury’s groceries online and convenience channels.”
Sainsbury’s said that 10% of its online orders were now through its Our Groceries App, which launched almost a year ago. This, it said, demonstrated “changing customer shopping behaviour”. In its general merchandise business, which includes Argos, mobile sales grew by 60%.
Digital ordering and collection in-store
Sainsbury’s now has 59 Argos stores in its supermarket branches, and 207 digital collection points. It said this week that like-for-like sales in Argos stores that are in Sainsbury’s supermarkets and have been open for at least a year are up by between 20 and 30%, while supermarket sales are up by between one and two per cent.
Sainsbury’s said it had been able to use the Argos hub and spoke model to deliver customer orders quickly. It plans to move a further 60 Argos stores to the new digital format over the next year, and says more than a third of Argos stores will be digital in a year’s time.
The future of the high street?
Sainsbury’s says that traditional general merchandise and clothing retailers are seeing a decline in footfall and sales as online grows. “The combination of a strong online proposition and a wide variety of delivery and collection options is popular with consumers, with Click & Collect accounting for a significant and growing proportion of UK online general merchandise and clothing sales.” It predicts that “consumers will increasingly expect a seamless, flexible retail offer across all products and channels to fulfil their orders rapidly, in a location and at a time that is most convenient to them.”
Morrisons on multichannel
Morrisons [IRDX RMOR] reported a 3.4% rise in like-for-like sales, excluding fuel, in the 13 weeks to April 30, the first quarter of its financial year. Retail sales rose by 3% over that time. Total sales rose by 2.8%, following a round of store closures. During the year it opened a new flowerworld.co.uk website, offering next-day bouquet delivery to customers anywhere in the UK, and enabled customers to pre-order food for parties and events online or instore. Online ordering for same-day or one-hour delivery, via Morrisons at Amazon, expanded to more postcodes.
Chief executive David Potts said: “We are improving the shopping trip in many different ways, which is making Morrisons more popular and accessible for customers. These new initiatives in-store, online, in wholesale and services are beginning to build a broader, stronger Morrisons.”
Mentioned in this piece…
- Home Retail Group