How Sainsbury’s is experimenting with one-off refurbishments across 100 stores to help drive growth

Sainsbury’s is piloting a 100-store refurbishment programme as part of plans to accelerate market and sales growth.

Market analysts recently visited a Sainsbury’s superstore in Cobham, three months after the food giant completed a refurbishment of the store.

Around 3,000 square feet of grocery space has been added, Argos signage is more prominent and the Tu clothing platform has been “streamlined”, according to broker Shore Capital Markets.

The update follows the launch in February of Sainsbury’s Next Level strategy, which includes plans to invest in technology and improve customer satisfaction ratings over the next three years.

It also contains targets to reduce operating costs by £1 billion and achieve more than £1.6 billion in retail free cash flow by 2027 to fund healthy shareholder returns.

Stores being remodeled as part of the experiment will undergo unique renovations based on factors such as competition, local leeway and market conditions.

The stores chosen by Sainsbury’s for improvements are divided into gold, silver and bronze categories, with the Cobham store falling into the gold group.

“A realistic approach is being taken,” Shore Capital’s head of consumer research, Clive Black, wrote in a note after visiting the Cobham site.

‘Sainsbury’s knows that not everything will work – interactive customer screens in stores spring to mind – but the experimentation is framed within a ‘fail fast’ context.

At Sainsbury’s Cobham, the food space has been expanded by around 13 per cent, to 130 more stores with 1,000 extra products.

The Surrey store has also focused on its takeaway, on-demand and late-night offering, which Shore Capital says has had a “very good initial effect” on sales.

Black said: “There’s a lot to like about it, but the test will be whether buyers notice the difference in the coming years – we’ll come out encouraged.”

Data released last week by Kantar showed sales at Sainsbury’s rose 5.6 per cent in the 12 weeks to early September, slightly ahead of Tesco.

Sainsbury’s had a 15.2 per cent market share during the period, well behind Tesco, which remains the UK’s biggest grocer by a long way, with a 27.6 per cent share.

This was slightly down on the 15.3 per cent recorded during the 12 weeks to 4 August, although during that period Sainsbury’s enjoyed its best year-on-year gain in market share since July 1997.

“Sainsbury is gaining market share… with a positively transformed grocery business, creating a strong foundation for the ‘next level’, which has the basis to deliver a larger and more productive food business,” Black said.

J Sainsbury’s shares were down 1.1 percent at 294 pence by early Thursday afternoon, though they are up around 17 percent in the past six months.