Sainsbury’s chief executive Mike Coupe has dismissed doubts over its £1.4bn acquisition of Argos, saying that while some shoppers are “indifferent” to Argos concessions appearing in its store others are “super enthusiastic” and that the idea the two brands can’t work together is “nonsensical”.
Speaking today (18 October) at IGD’s Big Debate 2016, Coupe acknowledged that there are “doubts” over the crossover potential between Sainsbury’s and Argos customers.
He admitted: “I’ve certainly heard the criticism. People seem to think if a Sainsbury’s shopper sees an Argos shopper they will run across the road to avoid them.”
However, Coupe said the fact that 40% of the population shops in Argos and Sainsbury’s annually justifies the “massive growth potential” of the £1.4bn acquisition.
“Nearly half of the nation shop at both ever year so of course the customers can overlap,” he added. “The reality is Sainsbury’s shoppers are either indifferent to the idea of Argos concessions within our supermarkets or super enthusiastic. But these are two popular mass market brands, so the idea they can’t work together is nonsensical.”
Coupe said Sainsbury’s would accelerate the addition of Argos concessions into its stores because “if we sell more non-food items, we will sell a lot more food items”.
“With the Argos app you can order something at 6pm, you can then pick it up from one of 2,000 stores or have it delivered to your house by 10pm. Adding this speed to Sainsbury’s is a winning combination of service and range,” he added.
Why Uber is a threat
Delivery is a growing area of competition for the big grocers as brands such as online retailers such as Amazon muscle in on its territory. Coupe said the rise of disruptors such as Uber and Deliveroo is also a big threat.
To counter services such as UberEATS, Uber’s food delivery service, Sainsbury’s now offers one-hour home delivery for customers in central London. Customers can order up to 20 items through its new iOS app Chop Chop, but Couple acknowledged that there is still a big challenge ahead.
“Uber and Deliveroo are a visible threat. Anybody that puts themselves between you and your customer is a threat.”
Mike Coupe, CEO, Sainsbury’s
“We’ve seen whole industries undermined by the likes of Uber and Airbnb and you can stand on any street corner in London and see examples of people trying to disrupt our business. But we have to adapt to these changes.”
Asked to predict how shopping will change over the coming years, Coupe backed predictive technology to become a core offer at the mainstream supermarkets.
He concluded: “Now the big shopping currency is to predict shopper needs and deliver the products they need automatically. A profound change in our industry will be to fulfill customer needs without the need for them to think about it. [Their shopping] should just arrive.”