Sainsbury’s is to step up its investment in digital initiatives as it seeks to position the business for an omnichannel future.
The grocer, which reported underlying pre-tax profit up 6.2% to £756m in the year to March 16, will scale back investment on new supermarkets this year and increase focus on digital and convenience stores.
Sainsbury’s will invest £1.1bn this year, with a good chunk on digital. This includes a core systems upgrade across the business, a replatforming of its online grocery operation, and development of mobile technology.
Mike Coupe, group commercial director at Sainsbury’s said: “We want to increase our capability in the digital area as part of an omnichannel strategy.”
Sainsbury’s reported annual sales in its grocery online business are almost £1bn, while annual sales in convenience is now over £1.5bn. Sainsbury’s chief executive Justin King said over half of its total sales are now made up by convenience and online.
Other digital developments include investment in Mobile Scan & Go – a trial whereby shoppers can scan their shopping on a smart phone and pack it as they go – and in its digital download businesses such as books and film.
Sainsbury’s has been slower than its rivals to develop digital businesses and still has yet to launch an online clothing operation or click and collect for groceries.
Sainsbury’s reported total sales up 4.6% to £25.6bn in the year, with like-for-likes excluding VAT and petrol up 1.8%. Pre-tax profit dipped 1.4% to £788m due to fewer sale and leasebacks than the previous year.
King said Sainsbury’s intends to develop all of the sites in its land bank, therefore it has not had to write down the value of any property in the same way as rival Tesco. He said: “Our approach has always been to open stores in areas where we don’t have a presence so our sites were always more than four miles apart from another Sainsbury’s, while some of the competition’s were less than two miles apart.”
The grocer outperformed the rest of the market, and has now delivered 33 consecutive quarters of like-for-like sales growth. King said: “We are outperforming because we are delivering value for money and continue to invest in the business.”
King played down speculation about his future at the grocer insisting that “Sainsbury’s has great prospects and I intend to play my part in its future prospects”. The grocer would not comment on whether headhunters had been appointed to search for King’s replacement.