Shortly after Sainsbury acquired the 114-store Jacksons Stores empire on August 16 last year, a friendly face at the former independent chain confided to The Grocer, without so much as a trace of sarcasm, that he had “never felt so secure” in his job.
He was not being disingenuous. The natural assumption when a large multiple player gobbles up a smaller rival is usually that the upheaval will be great and quick. Jobs will go, fascias will get torn down and a sparkling new refitted store may appear virtually overnight where the old one stood.
But what made this senior figure at Jacksons so confident was that the Yorkshire and North Midlands chain’s new parent happened to be the multiple with arguably the worst supply chain around.
He even went so far as to joke: “The way things stand, there’s more chance of them getting us to come and sort out their problems than showing us how to do anything.”
Obviously, the last comment was slightly tongue in cheek. However, it was also not a million miles from the truth.
It soon emerged following Sainsbury’s first foray with Bells Stores, the 54-strong north-east chain it had acquired six months previously, that the ‘Sainsbury’s at’ fascia was to be given another outing. Indeed, as things stand today, 14 Bells stores have been given a ‘Sainsbury’s at’ refit and three of Jacksons’ stores have got the same treatment.
But what many perceived to be a temporary trial is now a key plank of Sainsbury’s convenience plans. As The Grocer revealed (‘JS rolls out dual branding’, April 23, p4), Sainsbury’s Convenience MD Jim McCarthy plans to expand the ‘Sainsbury’s at’ format throughout the Jacksons and Bells estates, bar the odd sell-off of their worst-performing stores.
And last week McCarthy admitted he would even be taking the dual-branding concept a step further (‘Sub-brands head north’, May 7, p5). As well as sporting the Sainsbury moniker, future c-store acquisitions in Jacksons’ and Bells’ heartlands will go under either of those chains’ fascias if they do not fit the larger Sainsbury’s Local format, said McCarthy.
He also said JB Beaumont’s six East Midlands convenience stores, acquired by it last November, have been earmarked for the same dual-branding makeover, although the five south-east SL Shaw stores it bought a fortnight ago will get Local fascias.
The dedication to dual branding may have stumped some retail analysts, but senior figures within those businesses say they are not in the least bit surprised by McCarthy’s new public stance.
One says: “Everyone involved in the dual-branding venture is enjoying the ride and the success has even surpassed our own expectations. Sales are up, we’re not losing customers and we’re attracting new ones. What could be better?”
A key feature of the venture has been getting Sainsbury’s own-label products into the stores and this, say insiders, has given Jacksons and Bells a key edge over other c-store rivals.
One store manger says: “We’re not stocking any Basics products yet (Sainsbury’s new budget label), but we are doing great trade on Taste the Difference and Good For You. Customers know and trust these brands, and they’re selling much better than the wholesaler-supplied own-label lines we were stocking before Sainsbury took us over. It gets value into the business and reaps obvious rewards.”
Meanwhile, analysts, who initially admitted some surprise at McCarthy’s decision to stick with the dual-branding initiative and extend it further, now think it may turn out to be a master stroke, particularly as the chain bids to rein in the seemingly unassailable lead in convenience of arch-rival Tesco. At the latest count, Tesco has 160 Metro high street stores and 546 Express convenience outlets.
And the number one retailer, while hinting that it is no longer on the independent chain acquisition trail, has also committed to extending its burgeoning c-store empire at a ferocious pace with new builds or refurbs.
It also still owns no fewer than 527 T&S stores that are yet to be converted or divested following its January 2003 acquisition of the 1,215-store chain.
Sainsbury, by comparison, currently presides over a much more modest c-store estate of 262 stores that includes Jacksons, Bells and JB Beaumont. It has only 84 Locals and arguably needs some quick wins in order to mount a credible challenge.
One analyst says: “Sainsbury appears to have realised that it has bought some great c-store businesses, but that it still needs to retain the expertise within them. It has also shrewdly acknowledged the brand equity that these chains have with consumers in their heartlands.”
Robert Gregory, an analyst at PlanetRetail, says: “It would certainly seem strange that Sainsbury is not ready to leverage its own brand. It may be a lack of confidence, but one of the key questions will be whether these stores will be Sainsbury’s at Jacksons or Sainsbury’s at Bells in 10 years’ time.”
His colleague Bryan Roberts agrees, but adds: “I think the apparent success of the dual-branding trial may have taken Sainsbury by surprise.
“Both Jacksons and Bells have fantastic brand equity and Sainsbury has obviously realised that.”
However, the suspicion that Sainsbury may just be playing the dual-branding card for the time being has already crossed the minds of some within the Jacksons and Bells businesses.
One senior figure at Jacksons says: “For the dinosaurs among us, we have all seen it before. For example, Tesco has persevered with the One Stop fascia (from the T&S acquisition) on chimney-pot estates because they still have a strong identity with the local communities they serve, but I reckon it will probably only be a matter of time before it changes them over or divests them. The same thing could apply to us.
“At the moment, you’ll still find most people saying, ‘I’m just popping down to Jacksons’, even though we’ve also got Sainsbury’s name above the door. But what will happen when they start saying, ‘I’m just popping down to Sainsbury’s’?”
McCarthy doesn’t believe that this will be the case, although he admits that Sainsbury’s Local will obviously be the dominant format in its stated plan to create a £400m c-store business within the next two years.
“There are sites which are clearly fulfilling the criteria for a Local operation and this will be the strongest area of growth, but I think there will always be a place for the ‘Sainsbury’s at’ format. “At the moment, we are enjoying the best of both worlds.”
Meanwhile, McCarthy appears to be enjoying the wholehearted support of the key players within the dual-branded empires’ retained staff, despite the departure last week of Bells’ chief executive Steven Bell and the news that Bells’ MD David Graham is on his way in September to make way for Angus Oughtred, current MD of Jacksons, who will take over at the helm of both businesses.
Graham is adamant that Sainsbury’s commitment to the project is “fantastic news” for the business and adds: “We are absolutely clear on what is happening and Jim has very clear views.”
Only time will tell whether that vision will remain clear.