How is Sainsbury’s making an attempt to develop gross sales by retailer upgrades?

Sainsbury’s is experimenting with a programme of 100 in-store refurbishments as part of plans to accelerate market growth and sales.

Market analysts recently visited a Sainsbury’s superstore in Cobham three months after the grocery giant completed a renovation of the outlet.

Around 3,000 square feet of grocery space has been added, the Argos signage is displayed more prominently, and the Tu clothing platform has been ‘rationalised’, according to broker Shore Capital Markets. 

The upgrade follows the February launch of Sainsbury’s Next Level strategy, which includes plans to invest in technology and improve customer satisfaction rates over the coming three years.

Ready to go: Market analysts recently visited the Sainsbury’s superstore in Cobham three months after the grocery giant completed a renovation of the outlet

It also contains targets to reduce operating costs by £1billion and achieve more than £1.6billion in retail free cash flow by 2027 in order to finance healthy shareholder returns.

Stores set for refurbishment as part of the experiment will have unique renovations based on factors like competition, local headroom, and market conditions. 

The stores picked by Sainsbury’s for upgrades are split into gold, silver and bronze categories, with the Cobham store falling into the gold group.

‘A realistic approach is being applied,’ head of consumer research at Shore Capital Clive Black wrote in a note after visiting the Cobham site.

‘Sainsbury’s knows that not everything will work, in-store customer interactive screens come to mind, but the experimentation is set within a context of ‘fail fast’.

For Sainsbury’s Cobham outlet, its food space has expanded by around 13 per cent to where it has 130 more bays with 1,000 extra products.

The Surrey store has additionally focused on its food-to-go, food-for-now and food-for-tonight offering, which Shore Capital claims has had a ‘very good initial effect’ on sales. 

Black said: ‘There is much from which to gain a warm glow, but the proof will be whether shoppers taste the difference in future years; we come away encouraged.’

Data released last week by Kantar showed sales at Sainsbury’s rose by 5.6 per cent in the 12 weeks to the start of September, slightly ahead of Tesco.

Sainsbury’s had a 15.2 per cent market share for the period, far behind Tesco, which remains the UK’s best-selling grocer by some distance with a 27.6 per cent share. 

This was slightly down on the 15.3 per cent recorded for the 12 weeks to 4 August, although during that period, Sainsbury’s enjoyed its best year-on-year market share gain since July 1997.

‘Sainsbury is gaining market share…with a grocery business that has been positively transformed, so creating strong foundations for the ‘Next Level,’ which has the basis to deliver a bigger and more productive food business,’ Black said.

J Sainsbury’s shares were 1.1 per cent lower at 294p on early Thursday afternoon, although they have risen by about 17 per cent over the past six months.