A clearer strategy must follow robust Christmas results at Sainsbury’s

Following today’s release of Sainsbury’s figures for Q3 FY2020/21;

Thomas Brereton, Senior Retail Analyst at GlobalData, a leading data and analytics company, comments:

“Sainsbury’s results are undoubtedly a pleasing read. Strong but expected grocery sales growth is supported by an impressive performance by Argos (+8.4%), as well as a surprisingly resilient clothing arm which achieved growth (+0.4%) over a period when many apparel players will see revenue fall year-on-year. Sainsbury’s success has been largely built on its strong digital presence (growing 81% in the quarter to account for 44% of total sales), and the quick embracing of grocery delivery, (sales up 128%), with the group’s mature multichannel offer appealing to shoppers under COVID-19 restrictions. Additional revenue and a dynamic organisational approach have resulted in forecasting a rise to expected full-year profits (up £60m to £330m), even after the planned return of £410m in business rates relief to the government.

“But while all looks on the up and up at Sainsbury’s, questions remain over the clarity of its long-term strategy. CEO Simon Roberts’ fairly new Food First strategy appears to be lining Sainsbury’s up to compete with its more price-orientated rivals, namely Tesco and ASDA, through greater use of its Price Lock scheme and pushing the Taste the Difference range where possible. However, this is a war Sainsbury’s does not want to become embroiled in for too long; while it will likely serve Sainsbury’s well in 2021 (which consumer sentiment remains low and product price is a higher priority for shoppers), the new strategy does not utilize Sainsbury’s unique position as a truly diverse retailer (considering the importance of Argos in the business). Sainsbury’s strategy should focus on bringing as many customers under the same roof for cross-sector purchases, ideally through promoting cross-purchasing benefits or offering benefit schemes that access all parts of the Sainsbury’s offer.”

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