Sainsbury's CEO explains cutting management positions, increasing salaries & creating 'department stores'

When John James Sainsbury and family opened their sixth store in Redhill, Surrey, in 1899, it is unlikely their ambitions for the future of the grocery store would have dared to dream as big so as to imagine the store today.

Reopened in October 2017 after three years of building work and only six days of non-trading, the sixth Sainsbury’s store now boasts over 60,000 square feet of shop with 42 aisles and multiple concessions.

Essential Retail was invited by Sainsbury’s CEO Mike Coupe to tour the new superstore for a behind the scenes look at the bells and whistles that give the Redhill Sainsbury’s the “department store feel” that Coupe and his management team aspire to.

The Sainsbury’s strategy is intrinsically linked with the two key drivers of the retail industry, explained Coupe. “Customers have never had as much choice as they do today and the rise of digital is changing the way that people shop. We need to invest in both, we need to join up multi-channel options for customers and we need to make our business more efficient.”

Making the physical and digital space shopping experiences seamless for customers is something that the supermarket chain is committed to, explained Coupe, who explained that to win in a competitive space, it’s important to make the shopping experience distinctive for the customer. “We have to deliver personalised value,” he added.

Paul Mills-Hicks, food commercial director at Sainsbury’s, expanded on the importance of distinctiveness. “It’s important to add value and distinctiveness in the areas we can. It’s hard to add distinctiveness to beef mince, for example, but with our slow-cook range we can and we can offer customers something special.”

Sainsbury's is opting to dedicate their end of aisles to themes rather than promotional deals
Sainsbury's is opting to dedicate their end of aisles to themes rather than promotional deals

Having listened to customer insight, and learning of a loss of faith in promotions, Sainsbury’s are instead opting to dedicate their end of aisles to themes rather than promotional deals. “We try and bring products together as a mission, a visual shopping list,” said Mills-Hicks, demonstrating a ‘big breakfast’ aisle end displaying a mix of entry-level pricing items and trade-up breakfast items. “We personalise our aisle ends according to our customers in different regions,” he added.

Scrapping Store Blueprints

In the past, Sainsbury’s supermarkets have been planned around a store blueprint, applicable to its many branches. Today, however, these blueprints have been scrapped, explained Graham Biggart, director of commercial operations. “Now, we focus on tailoring to our local catchment,” he said. “We’re trying to bring as many shopping missions into one physical space.” In the Redhill store, an area surrounded by many local offices, this tailoring means a takeaway pizza counter, a Sushi Daily, a Patisserie Valerie and a food ‘to go’ section with coffee stand. “It’s about creating convenience for shoppers,” explained Biggart.

Evolutions are moving beyond the customer-facing changes, however. Simon Roberts, retail and operations manager explained how Sainsbury’s is resetting its store operating model to reduce the number of senior management roles in each store down to a store manager, operations manager and customer trading manager. “By the summer, we’ll have appointed a new, smaller leadership team for every store. Resetting the store management allows us to do a better job for customers,” explained Biggart.

He also spoke about the announcement to increase pay for store colleagues to an industry-leading £9.20 per hour from September. “We believe we should pay the best rate in the sector in order to get the best team and best capabilities. In return, we’ll be asking for more productivity and more flexibility.”  

The Sushi Daily concession hopes to attract lunchtime foot traffic from local offices
The Sushi Daily concession hopes to attract lunchtime foot traffic from local offices

CEO Mike Coupe added that the new pay rate represents a 30% increase in four years – “something I’m very proud of. I believe in paying everyone based on the job they do. Equality, fairness, transparency and simplicity are key to how we treat our colleagues.”

Upping its Digital Game

Redhill is yet to introduce the Scan & Shop technology but is expecting it to be rolled out soon. Typically, customers spend more when they use Scan & Shop, said Clodagh Moriarty, director of online at Sainsbury’s. They are currently experimenting with ways to completely remove the checkout process at the end of Scan & Shop. “When customers are able to checkout themselves, we can rebalance the store front and redeploy workers where customer service really matters,” she said.

Meanwhile, they’ve changed software to pick shopping for online delivery orders and seen double-digit improvement in picker efficiency as a result. “We’ve migrated to the cloud and as a result have seen customer speed improvements,” said Moriarty. “We’ve also added personalisation where it matters – offering up suggestions about what online customers might have forgotten based on their shopping habits.” A third of customers engage with, and action, these suggestions she said. “We make sure we intervene only where customers find it useful.”

The Redhill superstore is 60,000 square foot
The Redhill superstore is 60,000 square foot

In London's Zones 1 and 2, customers can use the Chop Chop by Sainsbury’s app to order up to 25 items to be delivered (by bike) within 60 minutes of order.

The decision to position Argos stores inside of Sainsbury’s supermarkets is a model that “is playing to where the sector is heading,” explained John Rogers, CEO of Sainsbury’s Argos. “Our cost to serve same-day delivery is better than Amazon’s.” At Redhill, the in-store Argos is performing better than it was previously as a stand-alone store on the high-street.

Coupe and his management team are justifiably proud of their Redhill store and consider it a representation of the direction that Sainsbury’s is moving in – “We’re genuinely omni-channel when very few businesses are.”