Following the news that Sainsbury’s sales growth slows as the retailer slashes prices to tempt shoppers from rivals, Paul Harvey, Head of Grocery at retail consultancy Newton has commented:
“Although Sainsbury’s growth has slowed when compared to the previous quarter, their 0.2% like-for-like sales growth was still above analysists’ average predictions of a 0.1% fall. These continued positive results are partly down to Sainsbury’s working to improve its core service offering.
“Sainsbury’s has focused on the fundamentals most important to shoppers, such as boosting product availability and customer service. These kinds of improvements on the shop floor can make a huge difference. For example, improving queue management and scheduling alone can result in an 8% improvement in customer satisfaction, and reducing the time spent in the back room by improving inventory management can result in 4x more time spent with shoppers. Furthermore, implementing a targeted replenishment system can significantly increase availability, adding tens of millions of pounds in increased sales.
“Sainsbury’s cited that they wish to become 10% more competitive on price as a result of the Asda merger. In order to deliver this, multiple areas of the supply chain will be reviewed. Both will need to deliver savings through supply chain consolidation – particularly for non-branded products. However, this action combined with their increased buying power is only likely to buy them 2-5% percentage points in their cost of goods. Larger savings will only be made if they are able to combine areas of their product ranges, creating a net reduction in the number of products for an individual supplier and a decrease in the total number of suppliers.”
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