Sian Harrington
Sainsbury is to beef up its pricing strategy as it prepares for a price war between Asda and Tesco and seeks to reduce the gap in the longer term.
The retailer, narrowly hanging on to its number two position, is to increase its price chopped' activity on longer term promotions and reduce the number of BOGOFs.
Assistant MD Stuart Mitchell said Sainsbury could not afford to sit on the sidelines when it came to price so it intended to sharpen its position.
"Both Tesco and Asda are going to rip price out in the next six months and we can't walk away from a scrap over price," he said.
But he added: "We will narrow the gap over time but will not start a price war."
As part of its change in price strategy Sainsbury is also urging suppliers to get behind Nectar point promotions.
It will be writing formally to suppliers over the coming weeks to notify them of the changes.
Speaking at its yearly supplier conference Mitchell said the company needed to attack the marketplace on non-food.
"It is a major growth opportunity for us. We are committed to trebling the size of non-food by 2004-2005," he said.
Sainsbury has identified health and beauty, clothing and general merchandise as categories in which it is lagging behind competitors, with bakery, fresh foods and counters the areas where it could do better.
Assistant MD Sara Weller said suppliers should think format when it came to ranging, promotions, pack sizes and sampling. "We can do things in one format that we couldn't do everywhere" she said.
Sainsbury is to change all its buying and warehouse systems in the next few months. "We have stretched plans to bring in systems early," said group chief executive Sir Peter Davis.
A system freeze after Christmas means suppliers are unable to launch new products during certain periods.
But to pay for major systems investment suppliers are being asked for a 5% cut in costs.
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