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March 30, 2005

People: the key ingredient in the Whole Foods recipe

Following up on my slightly tongue-in-cheek post about staff motivation and customer service at Sainsbury's, I think this Fast Company article about Whole Foods is illuminating. Whole Foods is a fast growing retailer of organic produce in the US, and it owns Fresh and Wild, which you may know in the UK. Whole Foods has some amazing employment practices (you need to scroll down to the second duck on the Fast company page to read about staffing).

It just goes to show how managment ideas which are considered too quirky for big retail stores can be scaled up, with fantastic results - happy staff are more effective, customers get great service and it all shows up on the bottom line:

Indeed, Chris Hitt, who was at Whole Foods for 16 years and who left as president in 2001, says, "Customers experience the food and the space, but what they really experience is the work culture. The true hidden secret of the company is the work culture. That's what delivers the stores to the customers."

Not everything in the Whole Foods garden is rosy - the store is not unionised, for example - but staff turnover is low (20% for Whole Foods, well below the US retail sector average, compared with WalMart's 44%).

We know that boosting staff morale is on the agenda at Sainsbury's - maybe management could take a leaf from Whole Foods' book?

Posted by Adrian Trenholm on March 30, 2005 at 12:55 PM in People | Permalink | Comments (6) | TrackBack

The fabulous baker boy

Home baker that I am, my only regular purchase at the Sainsbury's bakery counter is 50 grammes of fresh yeast.

There was a point when I grew very frustrated with Sainsbury's, because, even while the yeast was in stock, I couldn't buy it. The low point lasted three weeks and began with this conversation with a young lad behind the counter:

Me: Fifty grammes of fresh yeast, please.
Him: We don't sell that.
Me: Yes you do, I get it here every week. It's 16p for 50 grammes.
Him: What is it you want again? Yeas? Yeash? I don't know what that is.
Me (temporarily taken aback): Yeast, it makes bread rise... you're on the bakery counter...? Look, can you fetch one of the bakers?
Him: There are no bakers.

The following week, I meet the same truculent young fellow; this time in the company of a baker, who duly fetchs the yeast and serves me in a friendly manner. The third week, I really lose it. The young lad is flying solo again. I request the yeast and he replies, in all seriousness, We don't sell that.

We don't sell that?! Had he not figured out that I come in every week and ask for the same thing? Had he not taken the initiative and asked the baker where the yeast is kept, for when I come in next time? Had he not watched the baker sell me the yeast the previous week?

That week, I got my yeast from Tesco. Tesco don't sell yeast like Sainsbury's do, but if you ask the right baker, he will mutter I shouldn't really do this then bung you a piece of yeast the size of your head.

There is a happy ending to this story. Our young hero becomes a baker. I walk up and ask for the yeast and he goes and gets it. Just like that.

The following week, he is walking away from the counter, his shift over, when he spies me coming up the aisle. He turns on his heel and runs (runs, I tell you) back up the aisle and has the yeast waiting for me when I get there. He tells me that his shift was over, but he wasn't sure if the other staff knew how to serve me the yeast, which is why he ran back.

And remember how he didn't take the trouble to learn when he wasn't a baker? My wife went to buy yeast last week and our hero not only serves her, but as he does so, he turns to the puzzled looking Saturday girl standing next to him and says, Come and learn something: I will show you where we keep the yeast.

My point is this: somewhere along the line, that stroppy young boy became a cheery, helpful young man. He provides great service and looks out for his colleagues. And I think the key to that transformation was his becoming a baker. He will have had to learn new skills, put on a new uniform, become part of something. Of course, if you asked him he would deny it, but I think he is proud to be a baker. Now, he acts like he owns that bakery counter and he treats his customers accordingly.

You can try to teach customer service until you are blue in the face, and 9 times out of 10, it will not work. But when you give someone skills, ownership and pride in his work, then customer service flows automatically.

I am saving my links about retail employment practices for another day. For now, I think there is power in this kind of personal story, so share your best and worst Sainsbury's service experiences in the comments. Let's see if there are some common experiences which Sainsbury's could learn from.

Posted by Adrian Trenholm on March 30, 2005 at 11:40 AM in People, Stories | Permalink | Comments (3) | TrackBack

March 29, 2005

Focus on food... then focus some more

Comedian Mickey Flanagan did a great bit about cookery at the Brighton Comedy Festival. A recipe calls for sorrel. Not knowing where to purchase it, Flanagan calls his drug dealer.

Flanagan: Hello Mate, do you have any - I don't even know what this is code for - do you have any sorrel?
Dealer: Yeah, I can get it. You want an ounce?
Flanagan: Well it says here 'a good pinch' will do.

Of course, it's not just sorrel. Go into any supermarket - Sainsbury's included - and you will be hard pressed to find, say, shiitake mushrooms. You will see fresh herbs, but nothing much beyond parsley and basil. Peppers are generally the hothouse Dutch offerings, not the long, thin, really sweet Spanish types.

I was reminded of Mickey's schtick when I read about Sweetbay's new range of signature offerings, via Greg Manter's Retail Store Blog.Sweetbay is the new name for the 103-store Kash'n'Karry chain in the US. Here's an excerpt from the article:

[Kash'n'Karry] was just like any other store, said Nicole LeBeau, the company's communications director. There was nothing special about it.

So the company renamed itself Sweetbay as part of a rebranding plan designed to change its focus, look, and most importantly, its culture.

LeBeau said company research revealed that customers desired a store that was all about the food.

Sound familiar? CEO Justin King has said that he too wants to refocus Sainsbury's on food. What can Sainsbury's learn from Sweetbay?

Sweetbay is working on all the key areas - produce, training, store design and, ultimately, culture - with, LeBeau claims, eye-popping results. Sweetbay puts particular emphasis on five signature offerings:

  1. herbs
  2. tomatoes - up to 20 varieties in some stores
  3. peppers
  4. mushrooms
  5. tropical offerings

I am not about to tell you that a broad range of herbs is the key to Sainsbury's renewal, but the concept of signature offering may well be. Signature means you can't get this stuff at Tesco. Signature means distinction.

And just look at the list again. What a clever selection of items. These are the ingredients which can make or break a dish: common enough in recipes books, but difficult to find on supermarket shelves. These are the ingredients that real cooks will notice and remember. Stock these items consistently and we will return to your shop time and time again.

What I like most about this list, however, is not what's on it, so much as the thought that went into it. This, to me, is more than just a list of foodstuffs. It tells me that the people who work for Sweetbay have similar tastes and interests to me. It's a sign that Sweetbay really is all about the food. It tells me that Sweetbay is my kind of store.

Sainsbury's, please take note.

Posted by Adrian Trenholm on March 29, 2005 at 12:05 PM in Marketing | Permalink | Comments (0) | TrackBack

March 24, 2005

An Open Letter to Justin King, CEO of Sainsbury's

Dear Justin:

This is the first of what I suspect will be a number of open letters to you on this site.

First off, hat tip for your start with the new job. You have quickly grasped some fundamental problems and brought real progress to bear. There is still much to be done but a great first step!

The reason for my letter, however, is to talk about the longer term at Sainsbury's. There have been a number of false starts and we at 173 Drury Lane are keen this doesn't happen again.

I listened to the replay of the analyst conference call this morning and thought you handled it with aplomb. Except for one question.

As you know, the language of conference calls is peppered with arcane discussion of like for likes, segment stats, margin issues, pricing and, today, the details of executive option schemes.

And then amongst this detail, a lady analyst asked you the simple question - "I have a Waitrose, Tesco, Morrisons and Sainsburys in my area. Why should I choose to go to Sainsbury's?"

I suspect you were a bit surprised by this question from a so called expert. Surely they should know your strategy. Indeed, I sniggered myself wondering whether a disgruntled customer had somehow got on the call. But no, this was an analyst.

And, of course, this is the most important question you will be asked this year.

Undoubtedly, the great work you are doing now will bring benefit for some time. But what happens when you have cut prices and cut them again? What happens when you have got the supply chain sorted? How about when all the processes are running smoothly?

Undoubtedly Sainsbury's will be in a better position that it is today. But the cupboard will be empty. You will not beat Tesco or Asda using these tactics alone unless they somehow screw up. And that hope is not a competitive strategy.

No, at this point you will be relying on your answer to the lady's question - why should she (or I) (or anyone) shop at Sainsbury's?

Your answer was revealing.

You talked about the great locations that Sainbury's have.

You talked about going back to Sainbury's heritage. That Sainsbury's stands for "Quality at a fair price".

I don't want to talk about locations today though I know many who would dispute your assertion.

Rather what concerns me is "Quality at a fair price".

You want to add £2.5bn in revenues over the next 3 years. As the food market is relatively mature, some part of your growth will need to come from competitors.

Can you please tell me how "Quality at a fair price" differentiates you? Tesco, Morrisons, and Asda deliver this every day. Where is the incentive for the lady to switch?

Indeed, any half decent marketer could tell you that, today, quality is a weak differentiator. When Sainsbury's was in its heyday quality was a great way to stand out. But now the customer is awash with perceived quality. So BMW sells itself on its driving experience, Apple on design, Dell on responsiveness. I challenge you to tell me of a single mass market product that today successfully sells itself on quality as its main attribute. Quality is just the bar to entry. This is the expected.

Which of course leads to price. And you know, I am sure, that you could never win in a price scenario against the kings of supply chain - WalMart/Asda and Tesco.

Don't get me wrong. In the short term, your (necessary) work will pull back some of the people you lost. But to be blunt, "Quality at a fair price" will not solve Sainsbury's longer term problems. You need to do better.

You are a young man at 43. Maybe you see this as a good 2-3 year posting where you can build a reputation as a retail turn-around specialist (perhaps even selling the business in the process). But if you are keen, like we are, to see Sainsbury's returned to it's pre-eminent retailing role, then this will become the biggest question you will face in your career:

Why should anyone shop at Sainsbury's?

You must find a much better answer.

I will leave it there. Please come back to this forum. We have some bright minds here who have some strong ideas. Alternatively, for the price of a lunch at our local gastropub, we are happy to talk to you about some of our ideas!

In the meantime, I look forward to hearing your answer to the same question on future conference calls.

Yours respectfully,

Freddie Daniells

Posted by Fred on March 24, 2005 at 06:44 PM | Permalink | Comments (5) | TrackBack

Buying time in the City

This morning Sainsbury's released its Q4 trading statement. The recent press speculation that things were getting better has been proven right.

This was their first sales increase in over 2 years. Total sales are estimated to be up 7.2% year on year. These numbers need adjusting because of the number of special events in the quarter - Valentines, Mothers Day, Easter and Comic Relief. Adjusted for these items, they believe that overall sales growth was 3.7% - still a great showing. And most importantly, same stores sales growth was 1.7%, showing that organic growth is strong.

Last October Justin King (Sainsbury's CEO) laid out the problems that Sainsbury's face. These include:

  1. Uncompetitive pricing in some major categories.
  2. Bloated corporate bureaucracy at headquarters.
  3. Issues around getting stock on the shelves - there were problems both in-store and back at the depot.
  4. Poor response to event driven sales opportunities.

As Johnnie has said earlier "retail is detail" - these things matter.

Justin's message to the City is that fundamentally the Sainbury's model isn't broken. They just need to start getting the basics right. (I'll talk about this in a follow up post.) And they seem to successfully executing on this strategy. Over the past few months the company has:

  1. Cut the prices on over 6000 items in categories they felt themselves to be price uncompetitive. Their research shows customers are beginning to see the impact from these measures. Indeed, according to the Grocer magazine, the price of a bag of 33 goods has fallen from £46.62 on Jan 15, 2005 to £43.70 now.
  2. Cut over 600 staff from the corporate headquarters.
  3. Added 3000 staff in stores to help keep shelves stocked (and improve customer service).
  4. Improved processes in-store to make sure that stocking levels are improved.
  5. Opened new warehouses and invested heavily in systems and new procedures at depots to improve the supply of goods to the stores.
  6. Become more innovative. Over 50% of the premium 'Taste the Difference' range was revamped at the end of last quarter. Attention is now turning to the 'Be Good to Yourself' diet lines.
  7. Better marketing and stocking around events - they had great success in the quarter with Valentines, Red Nose Day (the 4m red noses they sold led to an added 0.3% of sales in the quarter alone), with expectations of a strong Easter.

93% of Sainsbury's revenue comes from food related lines (much higher than at Tesco's) so the rest of the business was not a highlight on the analyst call. Still, it was noted that the problems at Sainsbury's Bank continue, and that while they still believe in the business model, no big improvement is in sight. Indeed, it is my belief that management have realised the limits of the bandwidth and have largely shelved this problem for the moment.

There is no financial guidance beyond their earlier discussion of meeting the industry growth rate on a same store basis (estimated to be 2-3%) and the targeted mid teens earnings growth in the medium term. Despite the strong performance on revenue, it seems clear that the company will re-invest any surplus profits back into the business at this stage, particularly on the supply chain issues.

Overall I believe the City will be happy with what they heard today. My guess is that this release with increase confidence in the forecast of £250m earnings for this year that the company has been giving. Maybe one or two estimates for next year will trend higher as people anticipate some real payoff for these efforts starting to kick in. The stock will, I suspect, continue to rise into the earnings release.

This is a positive first step on the plan outlined by Justin King and should buy him time from both the Sainsbury's family and the City Institutions.

The preliminary results for the year ended 26th March are due to be announced 18th May 2005.

Posted by Fred on March 24, 2005 at 01:55 PM | Permalink | Comments (0) | TrackBack

March 23, 2005

Sainsbury's to re-sign Jamie Oliver, but what will they do with him?

Colin Grimshaw reports in Marketing this week that Sainsbury's is negotiating to renew their contract with Jamie Oliver:

The supermarket has admitted it is negotiating with Oliver over his contract, which expires in May. The renewal would mark a U-turn for Sainsbury's, which had been widely expected to end its five-year association with the chef.

Johnnie Moore may disagree with me, but I think retaining the link with Jamie Oliver is a smart move.  Here's why:

  1. Brand alignment: Generally, celebrity marketing doesn't work because of poor alignment between the personal brand of the celebrity and the corporate brand of the advertisers. Why would I take banking instructions from Samuel L Jackson, for example? But Sainsbury's sells food; in fact, Sainsbury's CEO Justin King wants to return the focus to food. Jamie Oliver cooks food, writes about food, pretty much lives and breathes food. At least in principle, this is a great celebrity tie in.
  2. Jamie's School Dinners: Jamie is scalding hot right now. His School Dinners scored 5 million viewers - massive for a C4 documentary - and, according to the Marketing article, over 100 MPs have signed his manifesto to improve school food. Even the PM wants to get next to Oliver.

Where I do agree with Johnnie is on the question of authenticity. Taking the obviously passionate Oliver and simply sticking his face on recipe cards to prop up Sainsbury's ITV drama sponsorship seems ludicrously shortsighted to me.

So how could Sainsbury's make better use of Jamie Oliver?

I will throw my hat in the ring with this suggestion: Sainsbury's could get Jamie involved with the Active Kids voucher scheme.

The Active Kids scheme already covers a lot of the same ground as School Dinners - the points go towards health and fitness activities in schools and shoppers get double points when they buy fresh fruit and veg. This seems pretty smart to me: I read in Heart Health, the free magazine from The British Heart Foundation, that in a survey commissioned by the BHF, 6 in 10 parents would prefer to see [supermarket] token schemes limited to healthy foods, even if it meant less money or reduced resources for their child's school.

School Dinners highlights the underfunding problem in school dining rooms. Even if you can get the ingredient budget below the target of 37p, it takes longer to prepare fresh food from scratch than to reheat burgers and pizzas. The dinner ladies - quite rightly - aren't going to work for nothing.

Why not tie the two together? Find a way to put Active Kids points towards an extra hour or two a day for your school's dinner ladies? This would put the Sainsbury's / Jamie Oliver tie in on a completely different level. Sainsbury's would get an instant publicity hit for Active Kids; the relationship with Oliver would be recognisably authentic, and the biggest winners of all would be our school children.

I am going to throw this one open to comments now: what do you think Sainsbury's should do with Jamie Oliver?

Posted by Adrian Trenholm on March 23, 2005 at 07:52 AM in Marketing | Permalink | Comments (1) | TrackBack

About Adrian Trenholm

My name is Adrian Trenholm and I will be  a guest author at 173drurylane.com for the next month. I am a freelance web developer and consultant, although, right now, I spend most of my time looking after Hannah, my 21 month old daughter. Find out what I am up to at my blog.

As this is my first foray into blogging, I asked Johnnie Moore for some guidance. He said, be positive and ask questions; don't purport to know all the answers.

In that spirit, I would like to use the blog as a space to test the theory that the UK is not all chav culture, turkey twizzlers and brown sauce; that, despite media hype and commercial pressures, there is a discerning, happy, healthy food culture in this country; and that Sainsbury's might do well by playing a lead role in that culture, instead of diluting its messsage to appeal to the twizzler guzzlers. 

Of course, I might be living in a land of make believe, so I invite you to set me straight by commenting frequently.

Posted by Adrian Trenholm on March 23, 2005 at 12:34 AM in About this site | Permalink | Comments (0) | TrackBack

March 10, 2005

Hope returns...

One or two snippets today that paint a more positive picture at Sainsbury's: The Retail Bulletin - New signs of hope at Sainsbury's
The latest TNS UK grocery market share figures offer further signs that the recovery programme initiated at Sainsbury's by chief executive Justin King is having an impact.
Times Online - Sainsbury looks in store for a recovery
With the shelves full, shoppers are going back to the retailer. So is Justin King’s plan working? By Richard Fletcher and Dan Box JO JONES, a loyal Sainsbury shopper from Leamington Spa, has noticed a great improvement in her local store in recent months. No longer does she encounter empty shelves or leave the store with only half the items on her shopping list. “It has changed. Now they have what you want every time,” she said. “I know people who stopped going to Sainsbury but are now coming back.”
There's also some interesting coverage over at thisismoney, including a new bonus scheme for managers. One or two swallows don't make a summer. But it's a relief to see some good news.

Posted by Johnnie Moore on March 10, 2005 at 12:33 PM in News | Permalink | Comments (1) | TrackBack

Jamie throws a curved one..

Thanks to Mark Pinkerton for pointing out this Guardian story - Jamie Oliver turns on Sainsbury's - in his comment on this post.

Jamie Oliver last night criticised Sainsbury's - the supermarket chain for whom he fronts an advertising campaign - for continuing to sell Turkey Twizzlers, the controversial Bernard Matthews product which has been banned in many Scottish schools.
I think this is more evidence of the problems of relying on a celebrity in your marketing. I think Sainsbury's needs to spend much less time with its image advisers and I hope somone remaining in their agency pitch list has thought of a more authentic approach.

Posted by Johnnie Moore on March 10, 2005 at 11:06 AM in Marketing | Permalink | Comments (0) | TrackBack