Sainsbury’s prepares for challenging years ahead as sales drop

Sainsbury’s sales took a hit in its half-year financial results, but the supermarket retailer continues to invest online

Sainsbury’s sales took a hit in its half-year financial results, but the supermarket retailer continues to invest online.

Sainsbury’s reported a pre-tax loss of £290m for the six months to 27 September 2014, blaming structural change in the grocery market as customers shop online and through convenience and discount channels.

The retailer stated it expected its like-for-like sales to be negative for the next few years, but said it had “robust plans” to address the challenge.

“Our strategy is evolving to address the continuing shifts in customer shopping patterns, which we believe will lead to a greater emphasis on product quality and ease of shopping, and an increase in multi-channel shopping,” said CEO Mike Coupe.

The retailer reported growth of 9% in online groceries, but noted that this was lower than previous years' growth, blaming increased competition.

“By knowing our customers better than anyone else we will continue to serve them through multiple channels and in ways that make their lives easier, regardless of changes in the market,” added Coupe. “Our colleagues will remain our greatest asset. We will invest in their training and development to ensure they can continue to deliver industry-leading service.”

The retailer has recently upgraded its online platform to enhance customer experience, and its online deliveries now exceed 200,000 a week, with annual sales of over £1bn.

Sainsbury’s, which has operated an online business for 18 years covering 98% of households, plans to trial new ways for customers to order their groceries, such as click and collect in tube stations in London. It also plans to open its first ‘dark store’ – an online distribution centre – in Bromley-by-Bow in 2016.

Mobile app trial

In a recent blog post, Sainsbury’s announced plans to trial a mobile shopping application that aims to reduce time spent in stores and allow customers to pay using their smartphone.

The app will allow customers to create shopping lists which can be used to navigate the shop and to scan goods as they are placed in the basket. It will also enable the device to be used to pay for goods to avoid checkout queues.

The service is expected to be rolled out to Nectar loyalty card holders next year.

Jon Rudoe, digital and technology director at Sainsbury’s, said it recognises that the customer’s weekly shop doesn’t start at the door to a store. “They know what they like and they also like that search for a bargain. They still want to come into store but, with limited time, they want to be able to get their shopping done quickly,” he added.

“That’s why we’re putting digital firmly at the forefront of our agenda, and putting technology in the hands of our customers.”

Rudoe stepped into the newly created position of digital and technology director in early 2014. He joined Sainsbury’s in July 2011 as director of online, and in March 2013 he took responsibility for leading Sainsbury’s digital strategy, including click and collect, digital entertainment, mobile scan and go and the digital experience team.

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