More from Sainsbury's
10 August 2018
We have covered Sainsbury's on this service pretty regularly and since they have moved to replenish at late night and also, early morning (doing away with night shifts), adding top stocking shelves and recently, restructuring management and staff contracts and associated structures, it looks like they're starting to run out of road....
The reason being is that you can not escape the impact of these changes to a customer, when you shop in their stores, or indeed, visit them as I do. The challenges are the same everywhere, half empty shelves, questionable decision making in stores and centrally - some confusion around ends and range makeup too.
These challenges are not unique to the market either, Sainsbury's are suffering badly and the others have store operational challenges of their own. But you will be hard pressed to find such a step down in standards and general presentation in a supermarket business as the one currently being seen at Sainsbury's.
It's amplified by the fact this business was so strong in store, with strong standards, well presented stores with colleagues who were generally friendly.
Customers enjoyed that consistency of operation and knew that with Sainsbury's, they may not be the cheapest, but you would generally get everything on your list and it would be a better experience than some rivals (certainly Tesco in their dark days, anything was better than that.)
When you 'bring customers up' on this strategy and they buy in to what the business stands for, to then lurch to the left field and add top stocking shelves. It doesn't necessarily compute.
Top stocking shelves make sense for the likes of Asda, where they have fast moving promotions and are a retailer who trade goods rapidly. To an extent I understand Sainsbury's doing it too, but their warehouses were always emptier anyway.
Top stock aside, customers get over it, the degradation in general standards and then, availability means that the shopping trip for a customer is sorely impacted. The continued mention of cost savings piques my interest as retailers can run out of road in this respect, and then tip in to basic cost cutting.
It has to be at someone's expense, and a recent story in the Daily Record indicated that the shelf life of doughnuts (not freshly fried / sugared ones, rather the iced topped ones) is being extended from 1 day, to 3 days.
https://www.dailyrecord.co.uk/news/scottish-news/sainsburys-order-bakery-workers-sell-12996455
Now this just doesn't stack up. It points to a operational challenge and there has been a change in the Bakery, so a manager running the Bakery now operates a number of other departments, including the fresh food counters further up the store.
Therefore control has to be exercised. It seems odd that waste is being incurred on doughnuts, given they are a line that are 'thaw / serve'. IE you basically take the product from the freezer, thaw it out and it's job done (with some packaging).
So just control the input and everyone is a winner.
But to extend the shelf life means customers are impacted, as there is no way these products are as good on day 3. Ultimately sales will be lost and what about the impact to the wider quality perception of the chain? A real concerning move.
So, let's have a walk around on this email at a store. Visited at 630pm on Tuesday of this week. Not a great store but reasonably local to me, it's a supermarket that is a decent size and was, like most in the older days, well run and offered a decent range.
The intriguing thing now is when I send a tweet or two out about Sainsbury's, people respond to say the same. The issue isn't that other retailers do not have gaps etc, but rather that Sainsbury's never did, but now operate stores that are far poorer.
The customer is impacted and their price cuts were noted earlier in the year, but there is little point doing that, if the customer is then forced to pay by poorer store standards as that customer, will not stick it.
Especially if like Sainsbury's, you have a basis of a business in the affluent South and they're accustomed to better standards to shop in. It's a worrying trend and availability issues are not system related, it looks like a situation of cost saving to save waste, but the issue with is that you can not cost save your way to prosperity.
Keep cutting harms sales, but then you pass the customer halfway and they're off elsewhere.
Waste is a fact of life for any food business, you have a budget for it, for that reason. You can save on waste altogether (near enough) by stocking only ambient food......(?)
Not great here at all, front table needs to be vibrant, they've given up with any such message here, there was rhetoric for a time that ends didn't need to be price focused.
However Sainsbury's have introduced price based ends on ambient (£2 or lower etc) in recent weeks and their fresh inspiration ends have changed to feature deals from time to time also. Which is fine, but they spend so much time telling us they can be different....
So Produce, just looks a mess. Whilst I was in stores some 12+ years ago now, I would have been fired out of a cannon on a late night for having a department like this, I know times have changed but Produce is where I would expect some semblance of shop keeping.
At least take the empties off and make it look like you know what you're playing at. If a new customer, or a disaffected customer popped in to this store, having not been to the retailer for a while, they wouldn't return.
We are in a world where customers form perceptions over one price and roll that up to the entire chain. This is why you have to be absolutely on the money in retail, add in food retail, discounters and the UK at large.
It's the most competitive sector in the most competitive country in the world.
The above, is not good enough.
We have discussed commercial monies rising in the annual report recently, and this seems to tally with that.
An interesting promotion but a leading deal? 10k Nectar points = £50. No idea on the number of prizes but the price of Colgate Plax is £3, so it's not necessarily a hugely competitive offer. A decent competition if you win, but it doesn't feel very strategical.
You would not have got this in the older days, giving over prime advertising space for a deal (linked to Nectar admittedly) doesn't set the barometer for value, or quality. There are a number of Nectar deals around the store and I imagine these are lucrative for Sainsbury's, as it gives the supplier the ability to access customers who buy their products.
It's all about data.
I noted a number of such deals around the store, again, I understand the ones for a larger film launch as that does tie in well for customers, but the ones on Cadbury's look as though it's just supplier funded fantasy land.
Any Cadbury product means you're entered in to a prize draw, unsure on the number of prizes but one would estimate that the chances of winning would be quite low. Still if you're buying anyway then it makes sense.
The offer didn't make sense though, turning around to the kids confectionery...
You could win a family weekend in Centre Parcs with the Little Bars / Freddo and Nectar. However it was not clear if these products (as 'any' Cadbury's product) also included you in the deal for the Match Attax deal opposite.
More Nectar deals here; the Christopher Robin film comes out soon and a link up with a movie always works well, especially with the kids.
However the products selected perhaps less so, especially given the price points at £7.50 / £8 however there were some at £1/£2 admittedly.
There can be so many signs around the store that it ends up being a situation of the store operation falling over - especially given the experience lost in the management restructure. Wimbledon prize here, long since expired.
Basic maintenance and shop keeping is also a challenge, this strange piece of kit I recognised, it sits in the top of the chiller to aid air flow.
Unclear why it was on the floor.
Areas of the store to focus on versus discounters, and indeed in the wider market are vital to win customers.
Free From is a key one for this, if we consider that Free From brings loyal customers who are habitual by their nature, they can not switch and change products as they know their allergies and the ingredients in the products they eat.
Availability is key - this was poor. I presume waste reduction is the agenda here given the level of waste can be high on Free From products. Sales rates can be up and down, customers who need gluten free bread inevitably have to go elsewhere if this store doesn't have it for example.
It all becomes a bit Chicken and Egg. But this struck me as a particularly poor example.
This is where experience comes in to play, admirable to make your own shelf ready cases of Crisps but it doesn't look great. Nor is it easy to get the products out for customers.....
Pancake shakers on the top stock perhaps told their own story about the stock turn in store, Pancake day was back in February of course. Although the store were still trading the shakers, it would have been common to see these reduced after the event to reflect the fact they are not a year round line really.
Also noted, inspection lacking and you can not blame a restructure all the time, the free range birds being caged occurred some time ago now, yet the shelf barker was still up. The website linked on the barker doesn't work any more either......
Where is the inspection? When you aggregate the amount of times this barker has been walked past by managers, colleagues, senior regional managers etc. It is beyond belief that it's still on display....
The ends have been spoken about before and I admire the fact that Sainsbury's indicate they don't need price based ends to compete, yet they have run them since January and it's much needed as price remains important.
Ends remain important, despite a lack of multibuys, customers still like promotions.
However ends like this are confusing, can a customer be happy with it? What does it all mean? Are they likely to be inspired with it? Or just not bother?
There isn't a mission in sight, the products are all mixed and there are far too many of them. Even Free From bagels make an appearance bottom right....
To sum up, it's not great, by any standard.
However, I felt that this end was far stronger, A holiday mission in mind and a good link between travel packs, larger packs of Sun Cream and toiletries alongside tanning products and non food accessories.
The shelf unit with books inside was also strong. A good end, prices not necessarily great but the inspiration was there.
The customer service desk has gone in this store, it has been going in a number of stores and it's a cost saving move, saving on labour required to man the desk itself.
However it is a contradiction in terms. "Customer service" - you may be queuing for a request, or a complaint, or even praise.
The solution is to put the desk clumsily on a checkout, that is not always manned (although colleagues are milling around) but all the other elements that a desk featured - returns, signage, information have to be integrated in to this area too.
I just do not understand how this doesn't impact a customer.
Really not great, I visit numerous shops and Sainsbury's, as far as standards go have really stepped back.
It is never easy to track what that means to a customer, IE do they care that things are untidy? I think they do, but it's harder to prove whereas your accountants and productivity people can show the savings of replenishing in day and cutting management structures.
The one thing is clear, Sainsbury's were lagging on Kantar, the like for like lags given Argos, and VAT are now included and the warm weather should have seen them perform stronger, which we will see at their next set of results.
The merger with Asda will run and run no doubt, given the CMA have still yet to come back . with dates for the phase 2 / fast track. However the Sainsbury's business for my money is not as sharp as it was on standards, the own label development is filtering through, but the ends and price points can be confused.
Sainsbury's occupied a nice position in the recession and great write down of 2010-2013, they performed well, were consistent in operation and delivered for customers.
Armed with knowledge of said changes and visiting stores in my role as a customer/layman, these changes are negatively impacting the customer experience in store.
That is not a good place to be. Price cuts on fresh foods and own label ambient lines were appreciated I am sure, but the store experience and wider 'feel' of a shop can not be allowed to go backwards because prices are slightly lower.
As we know so well from the market, it is never just about price.
From the Grocery Insight newsletter archive, first sent to subscribers on 10 August 2018. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.