Sainsbury's steps up convenience expansion

Sainsbury's eyes London opportunity for Local format like this Clapham store

Sainsbury’s, the UK’s third largest supermarket, is stepping up its expansion in convenience.

The retailer, which operates 335 Sainsbury’s Local convenience stores, is targeting 75-100 new stores in the 2010/2011 financial year - up from 51 last year. A further 100+ stores are planned thereafter.

Sainsbury’s chief executive, Justin King, said in locations where it is opening new convenience stores it is stealing customers from Tesco.

Sainsbury’s convenience stores are spread across the country, but are predominantly in the south. It has 146 stores in the north and 179 in the south, 82 of these are within the M25. They also tend to be concentrated in and around large towns and cities including Birmingham, Leeds, Manchester and London.

Stephen Boyce, head of property for Sainsbury’s convenience team, said the business had requirements for new stores in towns and cities across the country.

“Location is key to the success of our Local stores and our requirements include busy urban high streets and city centres, small neighbourhood or district centres, development sites, mixed-use schemes or existing units in prominent locations,” he said.

“London presents us with a lot of opportunity and Scotland is also a key growth area,” he added.

Sainsbury’s is capitalising on the buoyant convenience market in the UK. According to the IGD’s 2009 report, the sector is growing at 6%+ per annum. Figures from Nielsen, meanwhile, show how convenience is outperforming out-of-town supermarkets. In the year to 20 March 2010 sales at stores under 3,000sq ft grew by 5.6% to £28bn while sales at 25,000sq ft-plus stores were up 4.2% and sales at 3,000sq ft to 10,000sq ft high street stores were up just 2.3%.

As well as being the fastest-growing segment of the grocery market, Sainsbury’s is keen to increase its stake and points out supermarket operators control only 15% of the market in terms of store numbers.

Nicola Heaslip, Sainsbury’s head of convenience trading and marketing, recently recruited from Tesco, is leading the expansion drive.

Sainsbury’s convenience strategy is based around different shopper-mission focused formats and tailoring the range accordingly.

“We tailor our store offer to meet the needs of the local community the store serves,” said Boyce. “For example, our city centre stores cater for transient shoppers or office workers looking to shop for ‘food now’, whereas our stores situated in local high streets or neighbourhood locations meet the needs of customers looking to top-up shop. We continue to be creative in the way we use all available space to provide as comprehensive an offer as possible and flex our offer depending on location, demographics and footfall.”

Boyce added there was no prescribed format for Local stores.

“Sainsbury’s stores are not formulaic, every store is designed with local conditions in mind and we tailor the offer to ensure we are sensitive to other traders and complement, rather than compete, with them,” he said.

Sainsbury's Local: targeting 75-100 new stores in 2010/2011

Sainsbury's convenience push