Sainsbury increases share of convenience sales
its biggest move yet into the convenience store sector, announcing
yesterday that it had bought the Jacksons Stores chain.
The UK convenience market is estimated to be worth £23 billion a year and is one of the fastest growing food retail segments - it grew by 7.3 per cent in the past year - prompting several of the leading supermarkets to look for a bigger presence in the sector in recent months.
Number one retailer Tesco led the group with its purchase of T&S and Adminstore groups and Somerfield is now rolling out its own Essentials c-store banner. Morrisons is also to rebrand a number of the smaller Safeway stores as Compact convenience outlets, making the market place increasingly crowded.
Sainsbury, which currently has 67 'Sainsbury's Locals', has already added the 54 Bells Stores outlets in a deal earlier this year and seems to be giving its convenience portfolio a prominent role with May's appointment of Jim McCarthy as managing director of convenience. McCarthy was part of the management team which built T&S Stores and sold to Tesco in 2003.
Along with its 22 stores in partnership with Shell UK, the acquisition of Jacksons gives Sainsbury's more than 250 convenience stores.
"When we announced the sale of Shaw's, our US supermarket business in March 2004, we indicated that we would use a proportion of the funds to expand further into the convenience sector and this acquisition provides us with a great opportunity to do that," said Justin King, chief executive of the group.
He added that the deal is expected to be earnings enhancing in the first full year.
Last month Sainsbury's chairman Sir Peter Davis resigned after the group warned that pre-tax profits are likely to be below forecasts this year.
Jacksons Stores is said to be the UK's leading independent, regional convenience store chain with 114 stores across Yorkshire and the North Midlands and a turnover of £143 million in the year to 24 April 2004. All 2,350 members of staff and management will remain with the business.
In a similar approach to the one pursued at Bells Stores, the Jacksons stores will operate as a separate business run by the current management team from Jacksons' support centre. Jacksons' supply chain arrangements will remain in place as it benefits from its own warehouse and distribution facilities and Sainsbury's will act as a supplier to their depot.
