Sainsbury's non-food gamble

Related tags Sainsbury Retailing

Sainsbury is to launch a range of 2,500 non-food items, ranging
from cookware to electrical goods. But is the launch - ambitious as
it is - simply another example of the retailer running to catch up
with its more successful rivals or a genuine strategic move
designed to finally bring Sainsbury out of the doldrums?

Sainsbury​, the British retail group, is gambling on the success of a new range of products to help it reverse its downwards spiral and restore some credibility to what was, less than a decade ago, the country's most popular food store.

But the new range, launched today in 12 selected stores, is not an extension of the company's traditional food business but rather a bold move into the non-food arena. The launch of 2,500 homeware and cookware products is the biggest in Sainsbury's history, and an attempt by the troubled chain to benefit from the growing popularity of non-food items in supermarket outlets.

While French groups such as Carrefour and Auchan have long been 'one-stop-shops' for everything from milk to refrigerators or DIY material to clothing, British retailing has traditionally kept food and non-food separate, with the not insignificant exception of Marks & Spencer.

But the arrival of the world's biggest retailer, Wal-Mart, brought about a major change. The American group rapidly set about instilling its retail philosophy at its Asda subsidiary - including a major move into the non-food arena. Asda now has one of the biggest non-food portfolios in the British retail arena, and market leader Tesco has also been quick to see the potential here too, rolling out a wide range of items from electrical goods to car insurance.

In fact, the UK non-food market - clothing, footwear, electricals, health and beauty, homeware, games, music and videos, books, newspapers and magazines - is now estimated be worth over £100 billion.

Sainsbury, as usual, is playing catch up with its more successful rivals, although the sheer scale of its ambition cannot be faulted. The full new non-food range consists of soft furnishings, cookware, bedding, home and bathroom accessories, as well as new, larger ranges of home entertainment products, books and toys. By the end of October, 285 Sainsbury's stores across the UK will be selling the new products and by the end of the financial year 80 stores will have a dedicated home area. Nearly all Sainsbury's supermarkets will sell a selection of crockery, cutlery, glassware, home accessories and stationery.

But the challenge for Sainsbury is to offer something truly different. For a variety of reasons, it has consistently failed to match Tesco's success when it comes to food retailing - either by charging too much, or not offering a broad enough range, or not providing a pleasant enough surrounding for its customers - and these problems still remain even with the launch of the new products.

Sainsbury's sales have suffered in recent months because of the store refit programme across its estate, but with this programme now nearing completion - significantly expanding the company's sales space and allowing it to roll out the non-food range across a large number of stores - the group will hope that it can now concentrate its efforts solely on driving up sales through the newly-designed outlets.

But doubts must surely remain over Sainsbury's ability to generate growth. If it cannot keep pace with its rivals by focusing on its core food retailing business, can it expect to do so by moving into new areas, even in such a large scale way? The restructuring programme which began - belatedly - in 2001 has done little to improve the company's position - in fact, it has lost ground to both Tesco and Asda since then - and the non-food move smacks somewhat of desperation rather than of a deliberate growth strategy.

The potential is certainly there for Sainsbury to do well from this new line of business; the question is, has it the ability to do so?

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