One of the joys of observing retailers is the constant challenge they have balancing what is within their control and coping with uncontrollable external influences.
A retailer’s strategy for the controllable might be laudable, but when you chuck in exogenous factors like politics, exchange rates, crop harvests, weather, the calendar, shopper idiosyncrasies and competitors, that retailer’s results might be some way off where they might have been.
A number of these external factors were at play in Sainsbury’s fourth quarter update, with calendar vagaries shunting Mother’s Day and Easter back and impacting non-food sales rather unfavourably.
The impact of the weaker pound following the Brexit referendum was also identified as a prime reason behind cost pressures creeping back into the system, with Sainsbury’s asserting that it was doing its best to mitigate inflationary pressures.
In terms of competitors, which were obviously not discussed by Sainsbury’s themselves, my sense would be that at least three of them are no longer giving Sainsbury’s as much breathing space as they have done over the last two or three years.
Big rivals are raising their games and it will be intriguing to see how Sainsbury’s reacts to protect the share they gained after their prolonged winning streak
Big rivals are raising their games and it will be intriguing to see how Sainsbury’s reacts to protect the share they gained after their prolonged winning streak.
That brings us to the controllable facets of the Sainsbury’s business. Online, clothing and convenience continue to tick along nicely and the mainstream estate will continue to see the accelerated addition of Argos implants.
This will boost footfall and provide a bit of halo spending, so all is well and good there.
The main Argos business had a corking quarter and its ongoing growth and the synergies it offers will ensure that acquiring it will be seen as a masterstroke.
Growth might be facing some slight headwinds as Argos is kicked out of the Homebase estate by Bunnings, but the co-locations within Sainsbury’s will more than compensate.
One slight concern is the rather clunky transition from Cherokee to Tu clothing for Argos online, but I’m sure they’ll get there in the end.
There was no extensive update on plans for the fabric of the grocery estate.
Store estate mission?
Will we see more Sainsbury’s Nine Elms-style bells and whistles like sushi bars? Or Alperton-esque remodels around shopper missions? More will follow, I’m sure, in May when the full-year results are unveiled.
Sainsbury’s is demonstrating admirable dexterity and purpose in controlling the controllable
The product range continues to impress and the levels of innovation in and around fresh and private label is among the best in the business.
I cannot and will not have an opinion about the hellish-sounding butternut squash waffles and sweet potato tagliatelle name-checked in the trading statement, but I can attest that developments elsewhere in the range are top-class indeed.
All in all, Sainsbury’s is demonstrating admirable dexterity and purpose in controlling the controllable.