Sainsbury's to cut costs by £1bn and overhaul supermarkets in new strategy
Sainsbury's is overhauling its stores by creating more room for food while planning to save £1 billion over the coming three years.
The supermarket giant plans to reduce its general merchandise and clothing ranges in many shops to make room for more food. The company also has plans to close some standalone Argos shops and transform them into click-and-collect points within supermarkets.
This is under their revamped strategy named 'Next Level Sainsbury's ' which aims to have costs cut by £1 billion in the next three years through investing in technology to increase efficiency. Sainsbury's has reassured that this will not result in any store closures or staff cuts.
"High-returning investments in technology and automation will drive big steps forward in efficiency automating, optimising and prioritising high-volume tasks and driving better forecasting," said a spokesperson for the company. They have also planned to open another 75 convenience stores to add to their current 800, while speeding ahead with their sustainable agenda by installing rapid electric vehicle (EV) charging points in more than 100 stores by the end of financial year 2024-25, a significant leap from the current 20.
Simon Roberts, Chief Executive, showed determination saying: "We're determined to be first choice for food, ensuring more customers in more of our stores can enjoy more brilliant Sainsbury's food. That means more space for our food offer, while still delivering the general merchandise products customers want from us."
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Sainsbury's has revealed plans to boost shareholder returns with a £200 million share buyback scheme in the next financial year. The supermarket giant aims to expand its full food range across all 600 stores, focusing on 180 sites with the highest potential.
The company will "tighten the focus" of its non-food ranges but reassured it won't stop offering these items. Regarding changes to Argos, Sainsbury's didn't disclose how many stores might be affected over the next three years. Since acquiring Argos in 2016, several stores have been closed and integrated into supermarkets.
The plan is to reduce the estate to 180 by March. "We have further to go in terms of Argos store estate changes and we will also further refine the store operating model, with clustered stores replacing a one-size-fits-all approach," the group said. Sainsbury's also plans to grow its Nectar loyalty scheme, aiming for it to contribute an additional £100 million profit by March 2027.
This news follows last month's announcement that the group would wind down its banking operation to concentrate on retail. Sainsbury's has announced plans to expand its food ranges, tailoring each store's offerings to include more fresh food and ready-to-go meals.
However, shares in the supermarket fell by 4% on Wednesday morning. William Woods, a retail analyst at Bernstein, said that the strategy is "more evolution than revolution, as expected, building on the 'food first' strategy launched in 2020, which has so far been successful in turning around market share and bringing the focus back to food", adding that the "commitments are a bit fluffy, such as delivering profit leverage from sales growth".
* An AI tool was used to add an extra layer to the editing process for this story. You can report any errors to [email protected]
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