BRAND HEALTH CHECK: SAINSBURY’S - Does Sainsbury’s new store herald a revival? Sainsbury’s believes the launch of a luxury store format will see it regain its number one position from Tesco. Claire Murphy reports

If Sainsbury’s were a celebrity chef, it would probably be Delia -

reliable, respected, and fairly unexciting. But with marketing director

Sara Weller’s latest signing - the ubiquitous prince of ’pukka’ Jamie

Oliver - the supermarket is gamely trying to turn its offering into

something far more mouth-watering.

Oliver was rolled out again this week (wouldn’t we love to know how much

he’s getting) to open the store’s new ’luxury’ Cromwell Road site.

It may only be one store, but there is a lot riding on it. A tie-up with

Starbucks, a ’caviar cabinet’ full of high-end luxury food, and a wine

merchant - Sir Peter Davis’ new team has clearly been hard at work, and

on paper it looks like a good blueprint for the future.

In recent months, the chain has unveiled two new initiatives aimed at

proving it is keeping ahead of customer demand. Its new car-buying

service will capitalise on the publicity over UK car prices. And a deal

with fashion designer Jeff Banks will see it try to emulate rival Asda’s

George range of clothing.

But it’s in the food aisles where the crucial work needs to be done.

Having spent at least three years in the doldrums, Sainsbury’s needs the

boost that a well-received new store can bring.

The City also needs convincing that the company is finally moving in the

right direction, after at least one false dawn under the previous

management.

Picking Cromwell Road for the first major re-fit under the new regime is

no accident - on one of the major routes into London, the store could

act as its own giant ad. It is also just a short hop from Tesco’s

gleaming flagship by the Hammersmith flyover.

So is cheeky chappie Jamie a better choice than John Cleese, Sainsbury’s

previous brand spokesman?

And what does the chain need to pack its stores with to overtake Tesco

as the UK’s number one supermarket?

We asked Mike Godliman, marketing director of Verdict Research, and

Gillian Wilson, account director on Iceland at HHCL & Partners, to tell

us whether Sainsbury’s is on course for big things or if its path will

be as wobbly as a supermarket trolley.

VITAL SIGNS

Market share       December      December        December

                       1997          1998            1999

Tesco                  14.8          15.2            15.6

Sainsbury’s            12.4          12.2            11.8

Asda                    8.3           8.5             8.9

Safeway                 7.6           7.6             7.4

Source: Institute of Grocery Distribution

DIAGNOSIS

Gillian Watson

So, Sainsbury’s is doing a makeover of its store in Cromwell Road. That

says it all. Sainsbury’s, once an important pillar of middle England is

now just another superstore, setting out its stall, playing catch-up to

its slicker, fitter rival just down the road. But Sainsbury’s needs more

than just a little window dressing to pull it back to its once mighty

heights. Success has bred a Great British trait in this once great

British institution - rank arrogance - and a feeling that maybe it’s not

trying so hard anymore.

In the 90s it neglected its customers, with confusing price polices and

not-so-fresh produce. The aftermath is a customer base that feels let

down, almost betrayed. Sainsbury’s needs material action to win back its

customers, not platitudes; taking positions rather than just

positionings.

As a punter, I’d rather be given confidence in the actual safety of

what’s on my plate than a snappy slogan. If it did this, at least I’d

feel it cared.

It’s a long word and a difficult one to say, but it’s about time you

said it to us, Sainsbury’s - it’s about time you said sorry.

Mike Godliman

It seems that Sainsbury’s has finally moved back onto the front foot and

started believing in itself again.

Sainsbury’s lost its position as market leader to Tesco in the early-90s

and struggled to come to terms with being number two. But the latest

initiatives launched by Sir Peter Davis suggest he is re-energising the

company.

The new marketing campaign is working and the focus on quality is right

for Sainsbury’s. Our research shows that 33% of its customers cite

quality as the main reason they shop there, compared with 15% for Tesco

customers and 17% for Asda customers. In any retail market today, you

either have to offer quality or value (or both). You cannot survive

being a middle-market retailer trying to be all things to all

people.

In the short-term, Sainsbury’s can recover some of its lost ground and

regain its reputation as a quality retailer. In the longer-term, the

picture is not so rosy. The food market is saturated and prices are

falling. While Asda and Tesco can recover the falling margins on food

with higher margins on non-food, Sainsbury’s has not had a commitment to

nor expertise in non-food. Until it can rectify this, it will be

vulnerable.

TREATMENT

Watson’s wish list

- Don’t let Oliver become yet another middle class ingredients

campaign.

- Don’t depend on Oliver - develop other, surprising characters that

break the Sainsbury’s mould.

- Develop an initiative the other superstores haven’t thought of

yet.

- Go on, spend some money campaigning for food safety.

Godliman’s advice

- Develop a non-food offering so that it can compete on a more even

founding with rivals such as Tesco and Asda.

- Get the balance right between quality and value. Even consumers

seeking quality food want to feel they are getting good value.

- Maintain the new-found self-belief.

This article was first published on Marketing