Sainsbury boss is doing well - but will tesco spoil his fun?
>>THE ISSUES THAT MATTER, FROM THE PEOPLE INVOLVED
One of the fascinating nuggets to come out of our conversation this week with Sainsbury boss Justin King is his assertion that there will always be room for a mass-market retailer in our polarised grocery market.
You all know the theory: as the ends of the market polarise between, at one extreme, the value-led players and, at the other, the quality-focused operators, then you cannot afford to be stuck in the middle. That’s no-man’s land. End up there and you’re dead. But King has an alternative view. He reckons that, as the ends of the market polarise, the gap in the middle gets bigger and should be easier to exploit. The trick is making sure your offer has universal appeal so that shoppers are not compelled to go elsewhere.
So King has spent the past year making sure Sainsbury does a much better job for customers. And the early signs are really encouraging - with sales growth comfortably ahead of the market. Clearly, the fact that two of Sainsbury’s key competitors are increasingly focused on internal issues has been a bonus, allowing King to win trade from them. But there is no denying that he has made a massive impact on the Sainsbury business - and shoppers are loving what they now see in stores.
Yet, could there be a cloud on the horizon? Although many think of Tesco as operating at the value end of the market, the reality, of course, is that Britain’s top grocer has managed to create a business with truly universal appeal. Even though it’s too early to say whether or not King has succeeded in his ambition of making Sainsbury great again, I bet Tesco isn’t taking any chances. If only for historical reasons, it could not bear the thought of a resurgent Sainsbury. As the chain’s marketing director Tim Mason said last week: “We’re hugely respectful about our competition. We assume they do things for good reasons and that everything they do needs a full response.”
So, somewhere deep in Tesco HQ in Cheshunt, there is probably a small team already working on a plan to halt Sainsbury’s recovery in its tracks. That means Tesco will soon start gunning for Sainsbury at a time when shoppers are continuing to cut their spending and the market is slowing. It could turn into a fierce battle for control of the middle ground and will ultimately define whether there is a big enough gap in this polarised retail scene to support two mass-market players.
KIng doesn’t mind the gap
>>THE ISSUES THAT MATTER, FROM THE PEOPLE INVOLVED
One of the fascinating nuggets to come out of our conversation this week with Sainsbury boss Justin King is his assertion that there will always be room for a mass-market retailer in our polarised grocery market.
You all know the theory: as the ends of the market polarise between, at one extreme, the value-led players and, at the other, the quality-focused operators, then you cannot afford to be stuck in the middle. That’s no-man’s land. End up there and you’re dead. But King has an alternative view. He reckons that, as the ends of the market polarise, the gap in the middle gets bigger and should be easier to exploit. The trick is making sure your offer has universal appeal so that shoppers are not compelled to go elsewhere.
So King has spent the past year making sure Sainsbury does a much better job for customers. And the early signs are really encouraging - with sales growth comfortably ahead of the market. Clearly, the fact that two of Sainsbury’s key competitors are increasingly focused on internal issues has been a bonus, allowing King to win trade from them. But there is no denying that he has made a massive impact on the Sainsbury business - and shoppers are loving what they now see in stores.
Yet, could there be a cloud on the horizon? Although many think of Tesco as operating at the value end of the market, the reality, of course, is that Britain’s top grocer has managed to create a business with truly universal appeal. Even though it’s too early to say whether or not King has succeeded in his ambition of making Sainsbury great again, I bet Tesco isn’t taking any chances. If only for historical reasons, it could not bear the thought of a resurgent Sainsbury. As the chain’s marketing director Tim Mason said last week: “We’re hugely respectful about our competition. We assume they do things for good reasons and that everything they do needs a full response.”
So, somewhere deep in Tesco HQ in Cheshunt, there is probably a small team already working on a plan to halt Sainsbury’s recovery in its tracks. That means Tesco will soon start gunning for Sainsbury at a time when shoppers are continuing to cut their spending and the market is slowing. It could turn into a fierce battle for control of the middle ground and will ultimately define whether there is a big enough gap in this polarised retail scene to support two mass-market players.
KIng doesn’t mind the gap
No comments yet