sainsbury must beware the pitfalls of the middle ground
I guess there was a certain amount of inevitability about this week’s announcement from Sainsbury that Sir Peter Davis was leaving early. And, after all the corporate shenanigans of recent months, the company is probably relieved that it now has in place a completely new management team focused on rebuilding the business.
But as Sir Peter slipped out the door, Sainsbury slipped out a dire trading update and profit warning that prove the new team really does have its work cut out.
So what’s to be done? My understanding is that new boss Justin King believes Sainsbury must work harder to get the basics right on everything from availability to ranging to price; a view that has been reinforced by what he has seen during his tours of Sainsbury stores in recent months. More important, King wants to focus on the things that will make Sainsbury more like Sainsbury again; a destination shop where, to coin an old JS phrase, good food costs less. And while it must be competitive on price, particularly on KVIs, he thinks it should stop trying to dumb down elements of the Sainsbury offer in the vain hope of attracting shoppers from Asda or Tesco.
There’s a precedent here, I suppose. When Tesco decided to stop apeing Sainsbury in the early 1990s, it was able to crystallise a growth strategy that helped it first overtake its arch-rival and then turned it into one of the best businesses in the country.
Unfortunately for Sainsbury, it would appear to have very little room in which to manoeuvre. In a polarised grocery market, Asda, Morrisons and Tesco remain unassailable when it comes to selling great products at great prices. Waitrose, meanwhile, is strengthening its position at the quality end of the market - as our feature on page 32 shows only too well. Sainsbury cannot afford to get caught in the middle ground; stranded in the same no man’s land that led ultimately to Safeway’s demise.
But it will be tough. Unlike Waitrose, Sainsbury has a national presence to match its profile, and it needs to maintain some element of mass market appeal to keep the top line growing. But if the mass market keeps on demanding cheaper prices, where does that leave a grocer with the heritage of Sainsbury? Since 1998, two management teams have tried, and failed, to resolve that conundrum. Now a third team is having a go. And I wish them the very best of British.
third time lucky at JS?
I guess there was a certain amount of inevitability about this week’s announcement from Sainsbury that Sir Peter Davis was leaving early. And, after all the corporate shenanigans of recent months, the company is probably relieved that it now has in place a completely new management team focused on rebuilding the business.
But as Sir Peter slipped out the door, Sainsbury slipped out a dire trading update and profit warning that prove the new team really does have its work cut out.
So what’s to be done? My understanding is that new boss Justin King believes Sainsbury must work harder to get the basics right on everything from availability to ranging to price; a view that has been reinforced by what he has seen during his tours of Sainsbury stores in recent months. More important, King wants to focus on the things that will make Sainsbury more like Sainsbury again; a destination shop where, to coin an old JS phrase, good food costs less. And while it must be competitive on price, particularly on KVIs, he thinks it should stop trying to dumb down elements of the Sainsbury offer in the vain hope of attracting shoppers from Asda or Tesco.
There’s a precedent here, I suppose. When Tesco decided to stop apeing Sainsbury in the early 1990s, it was able to crystallise a growth strategy that helped it first overtake its arch-rival and then turned it into one of the best businesses in the country.
Unfortunately for Sainsbury, it would appear to have very little room in which to manoeuvre. In a polarised grocery market, Asda, Morrisons and Tesco remain unassailable when it comes to selling great products at great prices. Waitrose, meanwhile, is strengthening its position at the quality end of the market - as our feature on page 32 shows only too well. Sainsbury cannot afford to get caught in the middle ground; stranded in the same no man’s land that led ultimately to Safeway’s demise.
But it will be tough. Unlike Waitrose, Sainsbury has a national presence to match its profile, and it needs to maintain some element of mass market appeal to keep the top line growing. But if the mass market keeps on demanding cheaper prices, where does that leave a grocer with the heritage of Sainsbury? Since 1998, two management teams have tried, and failed, to resolve that conundrum. Now a third team is having a go. And I wish them the very best of British.
third time lucky at JS?
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