Management skills increase its market share

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How can Sainsbury’s organisation skills and management skills increase its market share? Background information on Sainsbury’s: J Sainsbury’s plc is a leading UK and US food retailer with interests in financial services and property. The Group comprises Sainsbury’s Supermarkets and Sainsbury’s Bank in the UK and Shaw’s Supermarkets in the US. The Group employed 172,900 people at the end of the year.

Sainsbury’s plc objective is to meet its customers’ needs effectively and also provide shareholders with good, sustainable financial returns. Sainsbury’s aims to ensure all colleagues have opportunities to develop their abilities and are well rewarded for their contribution to the success of the business. Its policy is to work with all of its suppliers fairly, recognising the mutual benefit of satisfying customers’ needs. It also aims to fulfil its responsibilities to the communities and environments in which it operates.

Sainsbury’s plc Mission Statement: Our mission is to be the consumer’s first choice for food, delivering products of outstanding quality and great service at a competitive cost through working ‘faster, simpler and together’. Quality food is a priority for our customers and a key component of the Sainsbury’s brand. We have invested in our food ranges and, during the year, have improved or developed over 3,200 products. Our own-label sub brands are again amongst the best in the UK.

We are working to develop a stronger complementary non-food offer through Adam’s children’s clothes, Jeff ; Co and a trial of a home enhancements range. We are working on developing our own health and beauty offer through up-grading our in-house capability. We have also been trailing Boots health and beauty and pharmacy shops in six of our out-of-town stores and are now extending these by a further three stores. We rigorously monitor 10,000 lines weekly to ensure that we remain competitive. We have reinvested some of our cost savings in price adjustments. Alongside this we continue to run a highly attractive, sustainable promotional programme.

Delivering great service is a key objective of our business transformation programme and during the year we made great strides in retraining our colleagues to serve our customers better. Our mystery shopper measure is now embedded in the Company; this and our customer satisfaction index demonstrate the progress we are making. We have achieved cost savings of �160 million in the year delivering a total of 250 million since we began the programme. These savings will be reinvested in enhancing the customer offer, building sales and in improving our operating margins.

We are replacing our legacy systems with ‘best in class’ IT solutions to help us gain competitive advantage. The Accenture relationship continues to go well and systems, which have already been implemented, are delivering substantial business benefits. During the year we reprioritised our programme in light of new opportunities and have updated the original sequence of work. Our stated IT re-plat forming project retains its scope and is on target. We embarked on a major programme to modernise our supply chain by developing a network of new depots around the country. We have made good progress and three depots, Emerald Park, Haydock and Langlands Park, are already operating.

Our first fully automated fulfilment centre at Hams Hall, Birmingham, will open later this year. Three additional fulfilment centres are under construction at Stoke, Rye Park (Hoddesdon) and Waltham Point; these will be operational by the end of 2003. We anticipate double running costs of 6 million in the 2002/03 financial years as we transition between old and new warehouses. The new depots will serve the majority of our stores within the period of the plan.

We committed to upgrading our estate through the reinvigoration of our stores. During the year we reinvigorated 117 stores. We have also stepped up our new store-opening programme, having opened 10 supermarkets and 15 Locals during the year, adding a further 422,000 sq ft of new space. Through our customer data warehouse we analyse data from our Reward Card to help us understand our customer needs and shopping missions better. Our programme of reinvigorating stores has evolved as we develop formats and trial them.

We now have four trial ‘mixed mission’ stores and early results are encouraging. In March we opened our first ‘main plus’ average superstore (with 16,000 new lines and 20 per cent of floor space focused on non-foods). We are developing a new ‘broad appeal’ format under the Sainsbury’s savacentre brand, which will offer an attractive range of foods and non-foods at good value prices. The first store opened in Northfield, Birmingham on 30 May and the format, if successful, will extend our trading reach considerably.

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