Sainsbury’s shift to business strategy

Sainsbury’s puts manufacturers’ brands to fore, countering criticism of over emphasis on own-label

Sainsbury’s is boosting the profile of manufacturers’ brands in its latest January Savers promotion in an effort to attract shoppers put off by the chain’s high proportion of own-label goods.

The price cuts on 200 goods includes a high proportion of branded products, many of which are discounted through “multi-buys” (buy two items, for example, and get one free). Analyst David McCarthy of BZW says: “The chain has included a large number of brands in the promotion, to counter criticism that it has pushed own-label too far.” Over 55 per cent of goods sold through Sainsbury’s are own-label.

It is understood that under new marketing director Kevin McCarten, who worked at Procter & Gamble for ten years, Sainsbury’s will seek to widen the choice of branded products and increase their profile. This will include launching joint promotions between the chain and the brands, and further price cuts.

It continues the trend of boosting brands at Sainsbury’s that began last May under the auspices of board director Robin Whitbread. (MW May 17 1995). In washing detergents, more shelf space was given to brands and less emphasis to Sainsbury’s sub-brand washing detergent, Novon. In November, Sainsbury’s launched its first joint promotion with Persil Automatic.

Some City analysts expect Sainsbury’s to continue the January Savers promotion throughout the winter if successful. “The question is whether the promotion is ‘campaignable’,” says one analyst. “A one-month sale is not enough to lift Sainsbury’s fortunes, so if the it produces an upturn, it will want to maintain volumes.”

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