Sainsbury’s this week set out its vision of turning Argos and Sainsbury’s into a single multi-brand, multichannel business. The five-year plan sees the group closing up to 70 standalone branches of Argos over the next two years, while opening 80 branches in its supermarkets. It will also open up to 110 new convenience stores and invest in existing stores.
As a result, it aims to reduce its costs by about £500m over the course of five years. In a capital markets day briefing document it said: “We are confident that we can grow sales and sustainably fund investment in our value, service, store estate and digital proposition.”
It is also to reshape its financial services business, and will stop new mortgage sales immediately.
A single customer experience
Sainsbury’s says making shopping more convenient is a key pillar of the plan, with investment in the areas that the customer most cares about – and is prepared to spend on.
By integrating its digital and physical shopping experiences it will, it says, be able to serve customers whenever and however they want. Customers will be able to log in through a single account, finding products and services from across the group.
The retailer will soon launch a digitised version of its Nectar loyalty programme, promising greater personalisation in its approach to rewarding customers, and says it will be able to use data and digital services to improve its monetisation of Nectar data.
Reshaping its store estate
The five-year plan will involve opening 80 branches of Argos within Sainsbury’s stores, and closing up to 70 branches of Argos. It will also open about 10 new supermarkets and close up to 15 existing stores, while opening in the region of 110 new convenience stores and closing up to 40, following a store estate review programme.
It also aims to improve to appeal and convenience of more than 450 supermarkets, 200 convenience stores and 250 Argos stores, ad it sees the opportunity to create 12 mixed-use development projects, bringing in a total of £350m of which up to £200m would come in the next five years.
“Our new store operating model and investments in technology are delivering consistent improvements in store standards and customer service while lowering our cost to serve,” it said.
Grocery sales improve but general merchandise is down
The update came as Sainsbury’s reported second quarter figures in a trading statement. It said that retail sales in the 12 weeks to September 21 grew by 0.1% excluding fuel – but fell by 0.2% on a like-for-like basis that strips out the effect of store, and business, openings and closures. Grocery sales were up by 0.6% while general merchandise sales fell by 2%, although closing sales improved by 3.3% thanks to strong online sales.
Sainsbury’s chief executive Mike Coupe said: “While retail markets remain highly competitive and the consumer outlook remains uncertain, we remain on track to deliver full year 2019/20 underlying profit before tax in line with consensus expectations.”
Image courtesy of Sainsbury’s
