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Sainsburys 2010 forecast

With bid proposals behind it, at least for the foreseeable future, Sainsbury’s can now focus on strengthening its operations in its core grocery market but also in the growing non-food sector.

Buoyed by the success of its ‘Make Sainsbury’s Great Again’ strategy, it is in the throes of a three-year plan ‘From Recovery to Growth’ spanning 2007-2010. The targets comprise: GBP3.5 billion (USD6.8 billion) of sales growth over the next three years (split grocery: two thirds and non-food one third); 10% growth in new space split equally; over 50% of property estate to be developed over next three years; GBP2.5 billion (USD4.8 billion) capital investment to support growth funded by operating cash flows and expanding its online home delivery service to 200 stores.

Developing high quality, innovative food continues to be its key business driver underpinned by sustainability (local sourcing), ethical trading (Fairtrade) and healthy eating. With greenfield large store development constrained, Sainsbury’s is becoming more flexible in terms of the type of sites it will look at with town centre redevelopments considered as means of growing its grocery and convenience store portfolio.

By March 2010, it plans to extend a further 75 stores and refurbish 190 outlets. Its target is to grow its total sales area to around 2 million square metres, split between grocery and non-food ranges. In terms of store numbers, this equates to 30 new grocery stores (including supermarkets, superstores and hypermarkets) and 100 convenience stores.

In November 2008, Sainsbury’s announced it was to bolster its convenience operation, with 50 new stores planned for 2009/10, and a further 100 the following year. As a result, the retailer is opening one convenience store a week and aims to increase that to two outlets a week by 2010.

The company has also been testing different approaches to the convenience market in five stores during the second half of 2008, focussing on two key themes ‘food on the move’ and a ‘local neighbourhood’ mission.

In terms of space growth, the company expanded its total sales area by 4% in 2008/9 and plans a further 5% space growth per annum thereafter.

Sainsbury’s also plans to expand its operations, through store opening plans, out of its heartland in the South of England and into areas where it is under represented such as Wales, Scotland, and Northern Ireland.
Operating within an intensely competitive grocery market, pricing continues to be at the fore of its operations with greater emphasis placed on competitive pricing, reflected in its strapline ‘Great products at fair prices’.