Sainsbury’s chief executive Justin King has said the UK grocer does not plan to follow rivals Tesco and Asda and offer a click-and-collect grocery service.
Tesco and Asda are investing in allowing shoppers to order groceries online and then collect at stores but King said Sainsbury’s believed the nature of its estate meant the service “may not be right for our business”.
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Speaking after Sainsbury’s reported higher annual sales and profits, in part boosted by increased revenues from its online business, King said a click-and-collect grocery service worked when retailers had large and inaccessible stores.
“At its core click-and-collect for groceries has two things. The first is if you have very, very big stores that are not great places to visit for a small top-up shop. That’s the model in France, where click-and-collect has grown fastest and where you’ve got big inaccessible stores where you have to fight your way through a lot of non-food to get to food. A little top-up shop in a big hypermarket is not a great experience,” King said. “Or if you have inaccessible stores. If customers have to drive a long way to get to you, you give them a bit of time back by having their shopping ready in the car park. Neither of those apply to us.”
Tesco offers a click-and-collect grocery service in 150 of its stores in the UK. Last month, Asda announced a round of investment in its multichannel operations that included an expansion of its click-and-collect programme.
King said Sainsbury’s would monitor the impact of the moves but suggested the retailer’s network was not suited to the service. “We have smaller stores than our competitors in much more accessible locations – and ever-more accessible locations as a result of the convenience estate,” he said. “We think those two things are key reasons why click-and-collect might work for others and may not be right for our business but we watch what others do carefully.”
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By GlobalDataSainsbury’s online grocery sales reached almost GBP1bn in its last financial year, up around 20%. The retailer, like its rivals, plans to invest further in the growing channel.
King insisted Sainsbury’s online service add sales and was profitable. “There are extra costs online – because we pick for our customers and we take it to their homes – but there are benefits. The avergae customer orders around GBP100, much larger in terms of the average in-store. An in-store customer that becomes an online shopper, or an online shopper that becomes an in-store shopper in total ends up spending more than they would have done in isolation. And that’s why it’s a profitable addition to any business that has multiple touch-points with customers.”
