Sainsbury has sold its 71,000 sq ft Savacentre in Basildon to Asda and ruled out any new openings under the brand until it can get the non-food right.
The move follows the sale of the Stockton Savacentre last year and the recent downsizing of stores in London and Sheffield, prompting questions about Sainsbury’s ability to make money from larger stores.
A spokeswoman for Sainsbury
said the Basildon closure was not a reflection of the chain’s lack of confidence in the Savacentre brand.
However, she admitted results from new format Savacentre stores had been “mixed” and there were “no plans to roll out new Savacentres at this stage”.
She added: “We won’t make any decisions until we properly assess the results of the general merchandise offer in the stores.”
Sainsbury has 18 stores trading as Savacentres: seven new look stores following a revamp of the format in 2002, plus 11 older stores. The first new-look Savacentre opened in Northfield, Birmingham in May 2002, promising to attract family shoppers and those “who previously had not considered shopping at Sainsbury” with new, family-sized packs, the full economy range and a substantial non-food offer taking up a third of the floorspace.
However, analysts said the recent closures were a clear admission that the Savacentre strategy was not working.
In a note on the sale of the Basildon store, Citigroup said the chain appeared to be admitting defeat: “At a time when Tesco and Asda are very space-hungry for large stores, Sainsbury seems to be admitting that the competition can make more out of the given sites than it can.
“Sainsbury says it cannot justify the expense to refit the store, which is 23 years old and in need of a major refit, which to us is an admission that the strategy is not working.”
Fitch Ratings senior analyst Jonathan Pitkänen said he wasn’t surprised by the sale of the Basildon store.
He added: “The Savacentre strategy has been piecemeal and lacks commitment. They don’t have the competence in handling economy ranges and non-food.
“They should have done it properly in the first place, persevered and brought in the expertise.”
Cap Gemini Ernst & Young head of retail Richard Hull said that Sainsbury’s apparent inability to get the Savacentre format right didn’t bode well given it is understood to be changing its marketing strapline to focus more on value.
“The question remains. Where does Sainsbury fit in the marketplace?”
Elaine Watson
The move follows the sale of the Stockton Savacentre last year and the recent downsizing of stores in London and Sheffield, prompting questions about Sainsbury’s ability to make money from larger stores.
A spokeswoman for Sainsbury
said the Basildon closure was not a reflection of the chain’s lack of confidence in the Savacentre brand.
However, she admitted results from new format Savacentre stores had been “mixed” and there were “no plans to roll out new Savacentres at this stage”.
She added: “We won’t make any decisions until we properly assess the results of the general merchandise offer in the stores.”
Sainsbury has 18 stores trading as Savacentres: seven new look stores following a revamp of the format in 2002, plus 11 older stores. The first new-look Savacentre opened in Northfield, Birmingham in May 2002, promising to attract family shoppers and those “who previously had not considered shopping at Sainsbury” with new, family-sized packs, the full economy range and a substantial non-food offer taking up a third of the floorspace.
However, analysts said the recent closures were a clear admission that the Savacentre strategy was not working.
In a note on the sale of the Basildon store, Citigroup said the chain appeared to be admitting defeat: “At a time when Tesco and Asda are very space-hungry for large stores, Sainsbury seems to be admitting that the competition can make more out of the given sites than it can.
“Sainsbury says it cannot justify the expense to refit the store, which is 23 years old and in need of a major refit, which to us is an admission that the strategy is not working.”
Fitch Ratings senior analyst Jonathan Pitkänen said he wasn’t surprised by the sale of the Basildon store.
He added: “The Savacentre strategy has been piecemeal and lacks commitment. They don’t have the competence in handling economy ranges and non-food.
“They should have done it properly in the first place, persevered and brought in the expertise.”
Cap Gemini Ernst & Young head of retail Richard Hull said that Sainsbury’s apparent inability to get the Savacentre format right didn’t bode well given it is understood to be changing its marketing strapline to focus more on value.
“The question remains. Where does Sainsbury fit in the marketplace?”
Elaine Watson
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