The boom in summer sales which aided a 2.4% increase in net sales at ASDA (12 weeks to end of June), saw Sainsbury’s retail sales grow only 0.8% (16 weeks to end of June); for grocery, this falls to 0.5% – dangerously below the level of food and grocery inflation of 3.1% for Q2 2018, observes GlobalData, a leading data and analytics company.
Thomas Brereton, Retail Analyst at GlobalData comments, “Despite this, Sainsbury’s is pushing ahead with the mega-merger with ASDA, set to create the UK’s largest retailer controlling a 22.6% share of the grocery market (provided the CMA approves it)”
However, with all senior focus on creating a smooth path for the proposed ASDA-Sainsbury’s entity to pass the CMA’s scrutiny, day-to-day operations of the supermarket grocer appear to be slipping. GlobalData’s July ‘Out & About’ report and Shore Capital – provide images and anecdotes of Sainsbury’s stores with empty shelves, untidy and disorganized stocking of products and lacklustre customer service.
This is a result of Sainsbury’s decision in January 2017 to restructure store roles, announcing that several manager, team leader and supervisor roles were to be cut from stores nationwide – opting for a fewer number of employees with control over instore operations.
Retail director Simon Roberts stated the changes would result in “a more efficient and effective management structure”, with cost savings used to enhance the customer offer and develop colleagues.
Although it is a leap to state that the restructure – either through poor conception (or both) – has been the only factor for the notable decay of instore performance, it certainly hasn’t had the desired effect of making the stores more effective.
For now, Sainsbury’s can fall back on a raft of excuses; the new store management structure is still in a transition phase, stories of unavailability are exaggerations, a one-off quarter of underperformance, etc. But if the instore problems are not resolved soon, the retailer’s H1 results at the start of November may produce more unfavourable results that will be harder to plaster over.
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