J Sainsbury plc comprises Sainsbury’s supermarkets (including convenience shops), Argos, Habitat and Sainsbury’s Bank.
The supermarket business is one of the big four in the UK, with almost 600 supermarkets, more than 800 convenience stores, and an online operation that has increased capacity to 850,000 orders a week.
Sainsbury’s competes in the mid-market of the grocery sector, and although its proposition is pitched at a slightly higher social demographic than its main rivals Tesco, Asda and Morrisons it is being savvier about pricing and recently launched an Aldi Price Match, as well as significantly investing in price through intiatives such as Nectar Prices.
Although it has been drawn into the grocery price war, its strength continues to be its differentiated position within the mass market, where its values of quality, provenance and sustainability continue to deliver.
Sainsbury’s, along with its main competitors, has had to face into the market challenges in the grocery sector and tough competition from the expanding discounters. This has necessitated the need to revise its strategy and restructure operations as they are driven by the shifting landscape.
Sainsbury’s is now pressing ahead with its multichannel strategy and focusing on recalibrating its store portfolio and enhancing its tech and digital propositions. Long-term former CEO Mike Coupe passed over the baton to former retail and operations director Simon Roberts in mid 2020 and Roberts has refocused the businesses’ strategy on the core food business “putting food back at the heart of Sainsbury’s”.
As of April 2023, two years into the Food First plan, Sainsbury’s has worked to reduce costs, make Argos and Tu more profitable and resilient, grow profits at Nectar, and strenghen its balance sheet. It is reinvesting benefits from its food business into prioritising value, customer service and innovation.
ARGOS AND HABITAT
UK supermarkets have been diversifying into the hypermarket arena for the past few decades, but Sainsbury’s took that much further when it made a move on Home Retail Group, which owned Argos and Habitat, in a £1.4bn takeover deal in 2016.
This cleared the way for the chain to become one of Britain’s biggest sellers of general goods, and allowed it to broaden its product range, while also harnessing Argos’s delivery network to ramp up its fulfilment proposition.
While leveraging synergies was always part of the acquisition plan, the two retailers have moved much closer together more recently with a number of initiatives that have consolidated the store estate reducing the number of Argos stores dramatically, instead installing Argos collection points within Sainsbury’s and opening Argos and Habitat shop-in-shops within the supermarket space.
In a strategy update in late 2020, Sainsbury’s said it was looking to integrate its logistics and supply chain network. The group has also been assessing the opportunity to bring together operations across Sainsbury’s and Argos to leverage savings. Areas included its 12 data centres, technology functions and fulfilment.
Habitat has also become Sainsbury’s main home and furniture brand, both in stores and online, and is working with third-party designers, including Sanderson Design Group, to bring consumers additional choice, as well as having launched a one-off range with Kew Botanical Gardens for summer 2023.
Sainsbury’s was the first major supermarket to open a bank in the UK in 1997, and it took 100% ownership in January 2014. It offers a range of financial products including credit cards, savings and loans, travel money and car, home, pet, travel and life insurance.
One of the 2002 founding partners of loyalty programme Nectar, Sainsbury’s bought it out from owner Aimia in 2018 in a £60m deal for all assets, colleagues, systems and licenses in the UK.
Argos was integrated into the scheme in 2020, and it went fully digital in 2019 with an app and website, in what chief digital officer Clodagh Moriarty said would “revolutionise the rewards and loyalty programme”.
Nectar launched Nectar360 in early 2020, bringing together its loyalty programme and B2B agency i2C to “deliver value to both sides”. Designed around four different capabilities – Nectar programme loyalty, data and insights, digital campaigns and media services – in one fully-integrated offer, it “builds a stronger connection between customers and brands”, Sainsbury’s said.
For its millions of customers, it means receiving more personalised offers and rewards from brands. For Nectar’s clients and partners, it gives access to more data to help them engage customers in a more targeted way by “offering a clear view of exactly who their customers are and what they buy”.
As the grocer continued to invest in price for consumers grappling with the cost-of-living crisis, it launched Nectar Prices in early 2023, competing with Tesco’s Clubcard scheme on providing discounts across hundreds of household products, as well personalised discounts via Your Nectar Prices.
Sainsbury’s launched its own clothing brand TU in 2004, which as of FY2021 became a £1bn business and has a range of more than 3,000 SKUs. It took it nationwide with an online launch in 2015, and the following year launched a premium clothing range.
Innovation rating: 3