Sainsbury’s ‘won’t stand still’ as it talks up digital potential

Sainsbury’s is forging ahead with its digital strategy as it awaits the sign off on its Argos buyout from the Competitions and Markets Authority (CMA), having noted a rise in online orders amid what was a disappointing year for sales.

The grocer posted a near 14 per cent fall in annual profits and a fall in underlying pre-tax profits to £587m from £681m for the year to 12 March today (4 May).

It’s another sign of the continued challenging conditions of the retail sector, both within grocery and outside. With effects of BHS’ administration still rippling through the industry, Sainsbury’s boss Mike Coupe said it would not stand still as it anticipates more shoppers to turn to digital channels for their shopping needs.

“Retail doesn’t stand still,” he said. "Stand still and you’ll get taken over by competitive dynamics. [What we’ve created with the Argos buyout] is a sweet spot of where customers are moving too.”

The retailer couldn’t be drawn further on plans for Argos beyond what it’s already revealed in the lead up to its £1.4bn offer for the brand being accepted. It wants to "create a food and non-food retailer of choice for customers" which will be bigger than Amazon, John Lewis and M&S and, thanks to Argos’ delivery infrastructure, be able to get goods to customers faster than ever before.

Last year its online sales were up nine per cent while orders also up 15 per cent, a trajectory it will be hoping to expedite given that the combined entity will reach 40 per cent of the UK population. In anticipation, yesterday it announced that it would double the number of click & collect sites in its store car parks over the next 12 months to take the total number to 200.

A number of store refurbishments have also been planned for the coming year which will see it introduce some elements from its 6 digital concept stores set up last year, including a mobile app which can help in-store shoppers find items and check out as well as a ‘mission-based’ layout for convenience.

“We’re pleased with results and performance,” Coupe continued. “We’re pushing the boundaries of what we can understand and achieve.”

In the mean time the business will continue to shift its pricing strategy away from promotions – something that it’s previously claimed is working well – and towards regular low prices whilst also pushing its ‘quality’ values.

Coupe said: “There’s now very little difference to mainstream prices and the discounters [Aldi and Lidl]. So we’ll continue to invest in targeted prices but we’re also investing in service and online.”

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