Justin King will be under pressure to make a decisive move to cut Sainsbury’s prices when he takes the helm on Monday, the City has predicted.
However, he would be wise to spend several weeks deciding exactly what the Sainsbury’s brand stands for before making any bold changes, warned analysts. “The temptation will be to go in with a blaze of glory and make a bold, aggressive move on price,” said one who asked not to be named. “But this would require a complete change to the marketing strategy, which is extremely risky.”
However, Seymour Pierce analyst Rhys Williams said Sainsbury had to move swiftly or risk being left behind as Asda stepped up promotional activity, Tesco followed suit and Morrisons cut prices at Safeway.
He said: “Sainsbury has always stated it doesn’t have to be comparable on price with rivals, but we’d suggest that isn’t as true as it used to be. They have to sort out the pricing architecture.”
Aside from strategic issues, King will have more immediate problems to address, such as headaches in the supply chain. “We’ve also heard non-food is not meeting targets, especially in womenswear,” he said.
If King can get all this right, added Williams, “he can name his price, but right now, he is facing an unenviable task”.