Tomorrow's Business Today
The fight for the centre of the plate
For a while there, it looked like Sainsbury’s was in a right stew.
Squeezed at the top end by Waitrose and by Aldi and Lidl at the bottom, it looked in danger of becoming one of those businesses everyone likes and nobody goes to.
Five years in to the reign of Simon Roberts as CEO, things look very different.
It is a success story of both execution and communication.
It is priced much better than it was compared to Aldi et al, but it is still a nicer place to shop than many of those budget rivals.
The plan was to capture the centre of the plate – if you go to Sainsbury’s for your fish and meat, you’ll stay for the rest.
Many more people are doing their core shop at Sainsbury’s, something the trading figures out tomorrow should make plain.
Sainsbury’s has been outpacing the market for a while; how long can it keep doing that?
When Asda kicked off a price war in March in a bid to halt a slide in sales rivals had to take it seriously.
But that on its own won’t produce the turnaround Asda wants.
Sainsbury might say you have to invest in everything, cutting a few prices isn’t enough.
Not all things are going Sainsbury’s way. A critic might argue that Putting Food First is an obvious thing for a grocer to do and since it works, why is it faffing about with banking and general merchandise?
The banking arm will be wound down – it now seems clear that supermarkets can’t do banking, they just don’t have enough scale to make it work.
As for Argos, well, Roberts and co have a grace period to try and sort it out, but it wouldn’t be the biggest shock if they scrapped it, or sold it on again. Maybe to Asda.
The City will also want to know if Sainsbury is forced to cut profit guidance in the face of all this intense competition.
Even if they are, the profits are still pretty healthy, and the shares are up 44% in the last five years, which is not bad.
The grocery sector looks like a rare example of things working like they are supposed to.
The competition is strong; the products are getting better; staff are getting paid more and investors do ok too.
Shops are easier to describe than banks, easier for hacks and flaks to get their heads around.
Even allowing for that, Sainsbury’s does it well.
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Press release of the day
A detailed outlook on the oil market here from the IEA’s Energy Mix.
There’s good stuff on supply, demand, on China and the US and on energy security from executive director Fatih Birol.
“The picture is not reassuring,” Dr Birol says. Left to their own devices, “markets will not deliver the level of diversification and growth that would significantly reduce supply security risks”.
Stories that will keep rolling
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