Sainsbury’s is set to undergo a three year shake-up to get back to basics and ultimately back to the top as chief executive Justin King laid out his vision for the future today.
The store will take on 3,000 extra shop-floor staff in a bid to reverse its recent decline and axe 750 jobs at its HQ as part of King’s strategy to re-invigorate the struggling business, which has been hit hard by increasing competition in the grocery market.
Under the catch-line "making Sainsbury’s great again" King said he plans to revive the operation by getting back to basics and focusing on selling food.
The extra 3,000 staff will help tackle issues regarding customer complaints over poor availability.
King said the three-year strategy should result in a sales recovery in the second half of next year. The plan is intended to see turnover boosted by £2.5 billion over the three years.
However, the retailer is facing a £550 million exceptional charge this year, which will drag it into a net loss for the year. But King said the second-half underlying profits would not be significantly different from then £125m-£135m forecast for the first six months.
Sainsbury’s will also be looking to cut costs by around £400m, which will allow it to make price cuts throughout the chain in a bid to compete with rivals Tesco and Asda. The savings will come in stock loss, central costs and IT loss.
King also said that the store will be simplifying its formats to just supermarkets and convenience stores so that Central and Savacentre formats will become part of the supermarket sector. The Bluebird concept in London will shut down early next year and 12 Local stores will also shut. The rollout of Shell forecourt stores is also being suspended.
The store announced its third profit warning of the year last week, and today unveiled second-quarter figures showing like-for-like sales excluding petrol had slumped by 1.1 per cent.
King said he hoped to "re-open the gap" between Sainsbury’s and market leader Tesco on quality which has narrowed in recent years.
