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 Last month, Sainsbury's celebrated its 140th birthday. Here we take a look at the retailer's strong performance and key growth opportunities for the future.
Better than expected
Sainsbury’s performance over the past 12 months has surprised many analysts. With its more premium based offer, amongst the major multiples, it was expected to find the trading conditions tough as the UK economy entered recession and shoppers sought to make savings in all areas of expenditure.
However, it has delivered a strong set of results. Like-for-like sales over the last quarter, to 21 March 2009, increased by 6.2% and it has been serving more customers with more items - with both the number of transactions and basket size increasing year-on-year.
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| Like-for-like sales over the quarter to 21 March 2009 increased by 6.2% | |
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Stronger on value
IGD’s recent shopper research, Shopper Trends 2009: Food Shopping in a Recession, indicates that shoppers are looking for both value and values from their food shopping and buying into products which will fulfil these needs. There is no doubt that Sainsbury’s has been focusing much more strongly on price and value.
Its ‘Switch & Save’ campaign has been a major element of this, leaning on one of the retailer’s key strengths as shoppers increase their propensity to buy into private label ranges.
Through its ‘Shop & Save’ programme, Sainsbury’s has also been running some of its strongest branded promotions which have been well executed in-store. Its ‘Cook & Save’ campaign demonstrates how the retailer has responded as shoppers portray a stronger inclination to cook from scratch, recognising the potential savings that can be made.
Leveraging its heritage
However, pulling on the price and value for money lever is only one half of the answer. Sainsbury’s has also been pulling on its values lever too. Issues such as provenance, heritage, and ethics continue to be important for shoppers, and these are clearly areas of strength.
Earlier this year, Sainsbury’s doubled its range of higher welfare pork and all its own-brand pork sausages, including its ‘Basics' range, are made from Fresh meat. It also became the first major retailer to stop selling eggs laid by battery hens and has recently expanded its choice of higher welfare chicken with the launch of a new ‘Freedom Food’ range.
Building for the longer term
While the retailer is clearly trading well in the current environment, it is also putting plans in place for longer-term growth. Having rationalised its convenience store estate over the past 12 months, 50 new stores will be opened this year, with a further 100 stores a year planned, indicating an acceleration in the expansion of its convenience operation. This, along with new superstore openings and store extensions will assist Sainsbury’s in achieving space growth of circa 5% this year.
Around half of this space will be devoted to non-food, a key element of Sainsbury’s future. Having consolidated its clothing and home operations under the leadership of Luke Jensen, Managing Director Non-Food, the retailer has now developed the ranges to confidently trade out of around 30,000 sq ft of non-food space within its larger stores. Later this year, Sainsbury’s will also be launching a dedicated online non-food proposition, and will be seeking to emulate the success of its online food operation.
Opportunities remain
Sainsbury’s progress over the last four years in broadening its appeal and investing in the customer offer has enabled it to continue to trade successfully under challenging economic conditions. The retailer has been able to respond effectively to a range of changing consumer trends and needs. However, what is also clear is that significant opportunities also remain for further growth as the retailer invests in developing new space, new channels and new product areas.
The Evolution of Convenience Retailing | 
Although consumer confidence in the UK has declined during the year, our performance improved as a result of the strength of the Sainsbury's brand and actions we have taken to adjust our offer to changing customer trends.
