CityBeat: Stuck in the middle with who?
Glynn Davis looks at Sainsbury’s dilemma in the middle ground of UK grocery retailing.
Justin King, chief executive of Sainsbury’s, put his head above the parapet this week for the first time since taking over the job seven weeks ago, stating that he intends to continue with the strategy of his predecessor Sir Peter Davis.
This involves remaining in the middle ground – between the smaller high-value niche operators and the EDLP-driven supermarkets. In doing so, he is backtracking on his previously held view that this was no-man’s land and that anybody staking out a claim here was doomed.
Irrespective of his U-turn, you would think that there should be space for somebody in this part of the market. Although it is often suggested that it puts you between the proverbial rock and a hard place, it undoubtedly provides some differentiation against the blandness of the other major supermarkets.
It is certainly a stance that Waitrose pulls off very well. Admittedly a much smaller operator than Sainsbury’s, it is tapping into the increasing trend for consumers to care about what they are sticking in their mouths. Waitrose caters for the growing audience that demands such things as food provenance and local sourcing. These are issues that are not going to go away and Sainsbury’s seems to play around in this part of the market more than the other big boys. So maybe it should play this hand with much greater conviction.
If it did, then maybe this would give it the fillip that it needs. Or maybe King is right when he argues that Sainsbury’s is pitching itself correctly to the market but has simply been let down by its execution.
Alternatively, perhaps the majority of UK consumers do in fact care zilch about what they eat, as long as it is cheap. If that is true then King was right with his earlier thinking.
[img r]Glynndavis3.jpg[/img][i]Glynn Davis was previously a fund manager in the City, and has since become a business journalist specialising in the retail sector. He contributes to a range of publications including national newspapers and the specialist trade press.[/i]
