Sainsbury's to have more convenience stores than traditional ones

Why does Sainsbury’s think its future lies in convenience stores?

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Sainsbury's has revealed that its smaller convenience stores - Sainsbury's Local - have seen a big surge in takings, and as a result, the company plans to double the number on the high street - to 1,500. It could offer a clue as to how the big traditional supermarkets will look in future.

Sainsbury's, along with the rest of the big four, have had to deal with plenty of disappointments in recent months. Most recently, it announced that in the past ten weeks it has seen sales fall 1.9%. However, in the same period, it said it had taken 14% more money in its convenience stores.

Chief Executive Mike Coupe told the Mirror this was already set to be a big growth area for the company. He pointed out that: "We are currently at just over 700 convenience stores and we're opening roughly one to two a week. At that rate you can easily get to well over 1,000 and, within the realms of possibility, 1,500." It means that the supermarket could soon have more convenience stores than large supermarkets.

Could this be the future for the big players?

Coupe told the newspaper that there had been a huge shift in consumer shopping habits, which had made it harder to sell groceries than at any other time in his 30-year career. He expected food deflation to continue, and times to remain tough for some time to come.

The traditional players are suffering from the fact that when people are choosing a destination supermarket for a big shop, we are far more likely to pick one of the discounters, because we are prioritising price. However, this is no longer the only way we do our grocery shopping.

One of the newer trends is for consumers to drop the big weekly shop in favour of popping to the shops two or three times a week. It's here when convenience stores can cash in, because they are in the right place at the right time when shoppers are ready for a top-up shop.

When people are doing this sort of shop, their top priority is no longer the price, but the convenience, so the big supermarkets that can afford to open stores in the ideal locations can gain custom without having to lower their prices.

The size of the stores means they can only stock a small range, and here the big supermarkets have another advantage over smaller players. They have access to sophisticated analysis, which can identify those items that sell best in any given area, and are most in demand. It not only ensures higher sales per square foot, but also that they gain a reputation for stocking the things people need most - and are therefore the most convenient.

According to analysts at IGD, convenience shopping is expected to increase by almost 30% in the next five years - so we will spend £46.2 billion in these stores. Given that the convenience market is expanding, and the market for traditional supermarkets seems to be shrinking, perhaps it makes sense for Sainsbury's to turn its attention to this part of the market. And perhaps we will see more of the big traditional supermarkets do the same.

But what do you think? Let us know in the comments.

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