September 07, 2005

Sainsbury's needs simple systems and empowered staff

Several times this summer, we have returned milk to Sainsbury's which was within its sell by date, but which had turned to yoghurt within a day or two of purchase and periodically we return various cheeses. This doesn't happen to the milk or cheese we buy from Marks & Spencer or from Tesco. I hadn't thought much about this until I read this article last month: Sainsbury's fined over rancid milk

The rancid milk, still on the shelf 23 days after it should have been drunk was deemed "unfit for human consumption".

A spokeswoman for Sainsbury's said: "It's extremely rare for something like this to occur.

"The store sells 120,000 fresh products a week and we have elaborate systems in place for checking that all our products are well within the label dates and that out-dated stock is cleared from our stores every day.

This may well be an isolated incident, but I think I can guess at two ways this kind of problem develops.

First, why does JS have an "elaborate system" where surely a simple system would suffice?

Second, for a simple system to work, Sainsbury's has to employ staff who care about food and customer service, and give those staff the authority to take action the second a problem is brought to their attention. I told a member of staff last week that the chicken I wanted to buy was past its sell by date, he replied "you need to speak to Customer Services about that" before going about his business. The chicken, it seems, was in someone else's section.

I have no idea how Tesco or Asda compare, but if Sainsbury's wants to have any credibility as a food focused store, I believe simple systems and empowered staff are high on the list of requirements.

Have you had problems with freshness at your local Sainsbury's?

Posted by Adrian Trenholm on September 7, 2005 at 12:31 PM in Food, People | Permalink | Comments (9) | TrackBack (2)

September 06, 2005

Investing in the US...

Geoff Jones reports a story that Tesco may bid for Albertson's in the USA.

Albertsons are the number 2 food retailer in the USA who are having a hard time against Walmart.This is interesting especially after all the recent UK PR about Asda (Walmart) bleating about Tesco's dominance in the UK....

Personally I think its sheer lunancy if Tesco do this. Has any UK company succeeded in the USA? However, it could be good news for Sainsbury etc in the UK since Tesco's senior management would be well stretched to handle a Albertsons take over.

Sainsbury's invested in Shaws in the US but sold out last year... to Albertsons.

Posted by Johnnie Moore on September 6, 2005 at 10:59 AM in News | Permalink | Comments (0) | TrackBack (0)

September 05, 2005

Our Social World

I'm going to take part in Our Social World this Friday. Any business trying to make sense of blogging and other forms of Social Software will find it a bargain-priced way to understand more. Among the attractions, Simon Phipps will talk about the benefits blogging has brought to Sun Microsystems. Anyone at Sainsbury's: for 100 quid, a bargain!

Posted by Johnnie Moore on September 5, 2005 at 07:16 PM in Marketing | Permalink | Comments (1) | TrackBack (1)

September 04, 2005

Do Sainsbury's side businesses damage the brand?

Big Dom. Little Bill? Same tune, isn't it? Open Channel D vents his spleen:

OK another stupid advert, Sainsbury's "little bill"

So they now resale hbos (esure) insurance. wow. great stuff. and how do they show it, well little bill, walks like a cowboy down a high street full of shops.

But Sainbury's is destroying the high street, while a cowboy is hardly much of a positive image.

We have mentioned before the dread "do you have a minute?" from the Sainsbury's credit card salesman who loiters in the fruit and veg section, now we have another television ad to make us cringe.

Sainsbury's bank has also come in for flak from The Times about its Discover credit card and this blogger thinks the bank's customer service is poor:

their customer service was appalling, and as soon as I've paid it off, I'm going to be ditching Sainsburys Bank, and that will equally apply to any organisation that accuses me of having an attitude.

I do wonder if the money that Sainsbury's makes on its various side businesses is enough to justify the resulting damage to the Sainsbury brand. What do you think?

Posted by Adrian Trenholm on September 4, 2005 at 12:01 PM in Marketing | Permalink | Comments (2) | TrackBack (0)

Sainsbury's: where good wine costs less

I don't know what Andrew makes of this, but the Observer says:

2004 Sainsbury's Classic Selection Vintage Claret (£5.49, Sainsbury's)
Claret under £6 is often rather challenging, but this is a huge step up from the same supermarket's basic Bordeaux. It's fragrant, grassy and elegant with little or no oak and plenty of refreshing plum and cassis fruit.

Posted by Adrian Trenholm on September 4, 2005 at 12:00 PM in Food, Marketing | Permalink | Comments (0) | TrackBack (0)

September 03, 2005

Sainsbury's gets its organic act together

This is great news from The Independent on 28 August:

J Sainsbury will today unveil a multi-million-pound shake-up of its organic range, the latest thrust in attempts by its chief executive, Justin King, to turn the supermarket chain around.

Sainsbury's, which is struggling to lure back customers lost to rivals such as Tesco and Waitrose, is adding 100 new products to its rebranded SO Organic range. Prices will also be slashed on a quarter of products, which include Welsh lamb, milk, eggs, wine, cheese, fruit and vegetables. A spokeswoman said the organic market in the UK was growing at around 15 per cent a year, and accounted for an increasing proportion of the retailer's own sales.

On my way to my local Sainsbury's yesterday, I noticed a billboard announcing a substantial price cut on free range organic eggs. Great news. This is the first time I have noticed a really substantial price cut on any item that I buy regularly from Sainsbury's.

What a canny move. Not only is the organic market growing, Sainsbury's is the first of the big three supermarkets to really make a song and dance about its organic range. At last: distinction, instead of more "me too" marketing.

My gut feeling is that it will take a little time for this strategy to pay off. There is a perception, after all, that organic is very much more expensive than non-organic, so it will take a while for the "organic is cheaper at Sainsbury's" message to sink in, especially among shoppers who have previously avoided organic because of cost. Let's hope Sainsbury's holds its nerve and continues to invest in this strategy, whatever the initial results.

Posted by Adrian Trenholm on September 3, 2005 at 11:41 PM in Food, Marketing | Permalink | Comments (1) | TrackBack (0)

Jamie Oliver vs. Stormhoek

Hatful of Hollow linked recently to a Wall Street Journal article on using econometrics to measure advertising impact. Sir Martin Sorrell from WPP Group is really championing econometrics, and the article featured a bit about the Jamie Oliver ads:

Econometrics uses statistical analysis to measure the relationship between different sets of events, such as the effect of educational qualifications on wage levels. To determine an advertisement's effectiveness, econometricians write an equation to measure the effect on sales of different factors, including the weather, price cuts and advertising. For the advertiser, the purpose is to help decide which ads to run...

British supermarket chain J Sainsbury says an econometric analysis of a long-running TV ad campaign, featuring celebrity chef Jamie Oliver, "probably" helped the chain decide to renew Mr. Oliver's contract earlier this year.

In 2002 the study found that ads that had run since 2000 had generated £1.12 billion ($2.03 billion) in revenue at a cost of £28 million a year. The analysis was done by a WPP-owned research consultancy, ohal, which continues to work for Sainsbury. More-recent data haven't been released.

Compare and contrast with Hugh Macleod's recent post on Stormhoek:

Although we can track the blogger's online conversations easily enough, we have no accurate way of measuring how many offline conversations the freebie thing is generating. Sure, we get anecdotal evidence of it all the time, like Damian's above, but so far it's impossible to measure directly.

Other marketing bloggers keep e-mailing me, asking me for numbers on how the campaign is affecting sales. Basically, they want a case study. They have products and ideas they want to sell to their clients, and they're looking to me to provide them with objective, third-party proof that this whole blogvertising thing actually works.

Well, the wine has been selling very well indeed, ever since the Blogger Freebie thing started. But that's just one part of the equation. Other factors include a damn good product, a good shelf positioning at the supermarkets, a marvellous sales team doing a great job, and also the fact that they now, like Damian, have a story (A) they genuinely like telling to other people and (B) other people don't seem to mind hearing.

So maybe it doesn't really need to be measured.

I wonder what econometricians would make of Stormhoek?

Posted by Adrian Trenholm on September 3, 2005 at 11:16 PM in Marketing | Permalink | Comments (4) | TrackBack (2)

Is Buying a Strategy Such a Bad Idea for Sainsbury?

Judging by the dire warnings Sainsbury received from the London Business School, the IOD, and a “top FTSE 100 firm”, you’d swear that it had asked al-Qaeda to help it develop a corporate strategy rather than benign management consultants McKinsey and Co. The article in question accuses companies that use consultants for strategy planning of “outsourcing management” and blindly accepting whatever strategies the consultants dictate. In short, it suggests that any company buying in strategy is not “long for this world”.

As you may have sensed from the tone above, I do not agree. But before I continue, I had better disclose that I too am a strategy consultant (not McKinsey) and that the text below needs to be read bearing this in mind. However, let me also add that I would be the first to turn down business if I don’t believe that I will create value for the client: failed strategy engagements never make good case studies. McKinsey knows this better than anyone.

For a variety of reasons, I believe that Sainsbury needs help from whatever quarter it can find it – inside or out. One reason is that the company seems to be irreversibly losing market share to Tesco and ASDA. It has even resorted to buying market share from struggling competitor Morrison. Hopefully McKinsey will help Sainsbury by asking why they are attempting to grow when they should first be learning to manage what they have more effectively.

Second, Sainsbury needs help because it still behaves like a family business. As they say: the first generation makes the fortune, the second holds it, and the third spends it. Before anyone notes that the last family member – Lord David Sainsbury – resigned in 1998, let me suggest that a family culture need not necessarily disappear within a decade. Its effects can easily be transmitted for up to a generation by executives originally employed by the Sainsbury family.

Third, any strategist worth her or his salt would probably explain to Sainsbury that underperforming companies should consolidate their activities and focus on making money from their core competencies at least until performance improves. If Sainsbury has forgotten what its core competencies are, perhaps McKinsey could help it to re-discover them.

Finally, Sainsbury needs help to define its market position. As can be seen from this article, its brand values are diffuse and I am unsure what they stand for in relation to competitors like Tesco and ASDA. In other words, the market is not sure why it should buy there. Yes, Sainsbury should be able to address its brand positioning internally, but for some reason it has not done so. Such fundamental deficits require external assistance to rectify them.

So what could a consultancy like McKinsey do for Sainsbury? I believe that while Sainsbury’s management team are busy executing their daily operational duties (running the company), they are unlikely to find the time to sit down and collaborate on a decent strategy. This is where McKinsey could assist. It could, for example, interview all the Sainsbury executives individually, gather their collective wisdom and experience, and integrate these into a winning plan.

Second, strategy consultants can offer companies like Sainsbury objectivity simply not available in-house. This is because unlike employees, consultants are not (or should not) be constrained by the politics and culture of the organisations they serve. They should not care, for example, that “Sir David was particularly fond of this or that structure”. If it’s losing money, good consultants can do what many employees dare not – they can recommend that it be thrown out.

Third, and related to the above point, many consultants offer research-based expertise. This is the antithesis of the seat-of-the-pants experience-based management style used at Sainsbury (“I’ve been in this business for forty years – you can’t tell me anything about this market”).

Finally, maintaining up-to-date strategy skills is a full time job. Consultants like McKinsey possess these skills precisely because it’s all they do. It could never pay Sainsbury to maintain this level of skill in house. Of course Sainsbury could derive more value by ensuring knowledge transfer at the end of the project, but even without knowledge transfer, it would be better off with an externally developed strategy than they are now.

In summary, a consultancy like McKinsey can ease the burden of Sainsbury executives by providing an objective analysis of alternative scenarios and helping to make their planning a reality.

Posted by Max Blumberg on September 3, 2005 at 09:51 PM in Marketing | Permalink | Comments (3) | TrackBack (0)

August 31, 2005

A new addition to the team

I am very pleased to be the latest addition to the 173 Drury Lane writing team - my background is wine (a member of the Circle of Wine Writers and an Associate of the Institute of Wine and Spirits) and to say I am totally immersed in the wine and food sub-sphere of blogging and the trade int he UK as a whole would be about right! While I concentrate on the vibrant independent sector with particular emphasis on web-based merchants the supermarkets, who dominate the wine buying sector in the UK, cannot be ignored. I maintain several websites including Spittoon.biz and Andy's Scribblings, the latter being a long running email newsletter with a world-wide readership. I am also a contributor to slashfood.com and jzepp.

Posted by wine_scribbler on August 31, 2005 at 05:25 PM in About this site | Permalink | Comments (2) | TrackBack (0)

Going local

David Weinberger comments on the final failure of Denver airport's centralised baggage handling system and makes a general point about the benefits of less centralised approaches. This reminded me of Sainsbury's own problems with an overengineered distribution system that had to be abandoned in favour of something involving more human beings.

But I think Weinberger's point goes way beyond logistics. Big companies used to have an advantage in a world where bandwidth of all kinds was at a premium. Their advantage was that they could be quicker and more efficient at co-ordinating both things and ideas. Not any more. These days, individual citizens have easy access to tons of information and they are getting better and better at spreading it, outside the conventional company systems. Blogging is just one manifestation of this.

I'm wondering if Tesco has ridden the wave in terms of big, and brilliantly systematised, business operations.. and whether Sainsbury's needs to cut its local stores a lot more slack to engage with local people. I wonder if we're now past the peak of people being loyal to megabrands, and are starting to look for something a bit more human. None of the many big name food stores where I live conveys to me any real sense of connection to Islington, beyond the odd charity collection tin.

Adrian wrote here on Sainsbury's localising its potatoes. But maybe they need to go way beyond this...

Posted by Johnnie Moore on August 31, 2005 at 04:30 PM in Logistics | Permalink | Comments (0) | TrackBack (0)