Why Sainsbury's remains a force to be reckoned with despite Asda merger failure
Where are Sainsbury’s heading, now that the Asda deal is not happening?
With the ending of the Asda deal, there have been questions asked about how Sainsbury’s can win sustainably going forward, in our fiercely competitive marketplace. But we shouldn’t forget that they remain second or a close third in large supermarkets, online and in convenience stores. So they must have been doing something right.
So what are Sainsbury’s trying to do now? And what can we learn?
First, Sainsbury’s talk about being “there for our customers” and they are particularly good at “ease of shop”. Navigational signage and pricing is bold and easy to read. Promotions are simple, making it clear what you pay, and what you save. Availability in Fresh is an area to look at – not just having one of everything but enough to create a sense of abundance. But they are quick at checkout, particularly in convenience stores, and they are preparing for a post checkout world with the Holborn store trial.
Next – giving shoppers fair prices. Partly by running their business more efficiently, notably renting space in bigger stores to concessions partners. But also by better buying. They are said to be tough, well organised and thoughtful when running tenders, with a strategic eye on efficiencies through the supply chain. Beyond that, their promotional strategy means less “till shock” for shoppers (because there are no multibuys making people buy more than planned). And they can add extra value via Nectar vouchers and offers.
Finally, great product. Sainsbury’s has always looked to differentiate here, especially in food and drink. They see the trend to Provenance and Craft. Their Future Brands program looks to welcome that kind of supplier. They have perhaps overdone the number of these entrants in areas like healthy snacking and fresh juice, to the detriment of clarity for the shopper, but the basic strategy is sound.
They also work closely, often exclusively with bigger companies to bring innovation. PepsiCo’s Off the Eaten Path snacking range is given significant space and visibility in store. The Tiptree jam jar cocktail bay is even more striking, bringing something significantly different to the alcohol aisle.
Of course, Own Label continues to be important. Differentiation here is increasingly difficult – Aldi and Lidl for instance offer very good quality top tier. But Sainsbury’s are trying to up the ante – applying cutting edge consumer science to their own label development, including in depth market research and semiotics.
Right now (bank holiday weekend), Sainsbury’s are pushing hard to create trading momentum, with Nectar “spend stretch” vouchering activity, 25% off wine and the 150th birthday activity. But In the longer term, there is a clarity to what they are doing that suggests they will continue to compete hard in our marketplace. I wouldn’t underestimate them.
Jeremy Garlick is a Partner of Insight Traction, consulting with FMCG and Retail companies. He was formerly Head of Insight at Sainsbury’s, Waitrose and Premier Foods.