Sainsbury had a miserable start to the year. Its third-quarter results for 2004, which came in on January 1, showed a 1.2% decline in like-for-like sales. CEO Justin King promptly reaffirmed his commitment to resolving availability issues, declared that sales trends were showing signs of heading in the right direction and took action, cutting 600 jobs at head office from all areas of central support services.
And, with cries of “it’s business as usual” coming from the remaining 2,000 HQ staff, all King’s hard work and soothsaying began to pay off.
Three consecutive quarters of like-for-like growth heralded a new dawn - albeit with a somewhat slow sunrise in the low single digits.
“Our business plan is on track” became the mantra when asked if it had yet turned the corner, with March 2008 stamped as the date when Sainsbury would be made great again.
Slowly but surely, progress was made. With the three profit warnings of 2004 behind it, Sainsbury started to look at areas other than the bottom line this year. The launch of its corporate social responsibility programme, Active Kids, in February was a great hit with the nation. More than 20,000 schools registered for the vouchers-for-sports-equipment scheme in the first couple of months and a total of £17m worth of equipment and activity sessions was donated at its close.
Sainsbury also re-signed celeb chef Jamie Oliver as the face of the supermarket and ploughed £10m into the launch of its new slogan and ad campaign, Try Something New Today.
It couldn’t come too soon, with ‘Making Life Taste Bitter’ too often the jibe in the national papers.
Having Oliver’s contract signed and sealed has been a blessing for Sainsbury, despite rumours last year that it would drop the star. But that was before the School Dinners campaign. Now, it is fortuitously linked with the healthy food campaigner and championing the health of the nation’s kids. A multimillion-pound rebranding of its organic range in the summer and the planned relaunch next month of its Be Good to Yourself range are helping to cement its health credentials.
As for its strategy, it’s actually difficult to find issues to pull Sainsbury up on in the past year. Its prices are more in line with rivals, to the point that it highlights on its shelf edges where it equals or undercuts Tesco’s prices, and availability is at market-matching levels, it claims.
The only blip could be the fact that it failed to take over Asda as the number two supermarket, a possibility that was highlighted by Asda chief Andy Bond earlier in the year. However, it’s still on the cards. Indeed, King has pointed out that if both retailers continue their current sales patterns, 2006 could be the year it happens.
In the shorter term, in just a few weeks’ time, it will be either celebrations or commiserations all round for Sainsbury on January 1. For this year’s third-quarter results, it hopes, will show a full 12 months of growth - starting the year as it means to go on. Beyond that, growth on growth is the big goal for King in 2006.