It has become a meaningless cliché to talk about the increasing speed of change in retail, yet the recent dramatic news from the grocery trade is hard to keep up with.
It also raises a number of interesting questions, for Sainsbury’s in particular.
Sainsbury’s/Argos was a deal that at the time I thought lacked much commercial logic, but has it now perhaps been overtaken by events and become a superfluous and unnecessary diversion of management time and energy?
I don’t question Sainsbury’s ambition – to grow non-food, make better use of space, and compete with Amazon, etc – but in terms of profit there is a thin dividing line between innovation, agility and imagination and financial ruin.
It is a battle which at best can only produce a pyrrhic victory.
My overriding concern is the cultural mismatch between Argos (lowest prices, brands) and Sainsbury’s (aspirational, “try something different”, own-label), which would suggest the crossover between customers is low.
Lessons from history
Is history repeating itself? I have often viewed Sainsbury’s as having some sort of ‘death wish’ in that SavaCentre, Homebase, Shaw’s and Netto all proved to be unnecessary costly diversions from the ongoing deveĺopment of the core chain.
“Why are the grocery majors only belatedly looking for ways in which they can share in the growing ‘non-grocery’ food market, rather than having dominated and shaped this market from the outset?”
Where would Sainsbury’s be today if all the money and management time spent on these diversions had been devoted to the strategic development and growth of the core chain? Still ahead of Tesco?
It is wrong to single out Sainsbury’s for criticism in a sector where all too often long-term strategic thinking has been neglected in favour of short-term boosts to sales and market share.
The Booker deal (which competition issues may well kill) raises an important observation.
Why are the grocery majors only belatedly looking for ways in which they can share in the growing ‘non-grocery’ food market – ie, the £85bn spent on food consumed out of the home – rather than having dominated and shaped this market from the outset?
Dearth of creativity
The proliferation and success of Starbucks, Costa and the like, along with Pret A Manger or Eat, Greggs, street food markets, Deliveroo et al, stand as an indictment of the bankruptcy of strategic thought and long-range planning in grocery.
Success has been judged purely on the basis of the regular market share figures covering only a narrowly defined segment of the market.
Why, for example, are the convenience outlets operated by the big four by and large just cut-down versions of their larger superstores? The short answer is laziness and cookie-cutting cost savings allied to a lack of creative thought.
This policy was OK for suburban and rural locations, but in city centres a different approach is called for.
Personally, I resent the fact that I have to go to New York to have my taste buds and visual sense stimulated by the likes of Dean & Deluca, It’s Italia and even local independents.
But I guess, like everything else, we can blame it on the local rates burden.