| In September 2002 we
launched our new customer
loyalty programme with
Barclaycard, BP and Debenhams.
Just two months after
launch Nectar became the
UK’s largest loyalty programme
with over 11 million active
users. Customers prefer
Nectar to our previous
Reward Card, participation
is higher and cross-party
redemptions – a key sales
driver – have increased.
Collector numbers have
continued to grow with
the addition of Threshers.
The offer will be strengthened
further as the extended
sponsor group of Vodafone,
Ford Motor Company and
Adams Childrenswear come
on board providing more
opportunities to earn
points. Additional sales
build up will come through
over time. Nectar also
provides a wealth of data
to help shape our offer
and target potential new
customers. It has helped
us increase our direct
marketing to an additional
one million people. |
| |
| Reinvigorating
our stores |
| |
| During the year we opened
15 new supermarkets and
24 Locals. We are also
well advanced with our
store reinvigoration programme. |
| |
| This year we delivered 40 refurbishments and 29
extensions bringing the cumulative total to over
230 stores. Cumulative ultimate sales uplifts of
7 per cent and 23 per cent respectively have been
achieved resulting in post tax real returns above
our cost of capital. In total we added 850,000 sq
ft of selling space. The reinvigoration activity
is planned to reduce in 2003/04 to 10 refurbishments
and 23 extensions. We have gained many insights
from our work on stores and continue to adapt the
programme going forward, implementing learnings
and benefits across our estate and testing new concepts
and ranges in line with market conditions. |
| |
| Our Local format is
well established with
57 stores and the convenience
sector provides a real
opportunity to create
value. We have also used
selected stores as test
beds for new concepts
and ranges. Our store
at Hazelgrove (Manchester),
which trialled technology
led service initiatives,
won Retail Week’s ‘Retail
Launch of the Year’ award
and we are now rolling
out some key elements
across our network. |
| |
| In April 2003 we opened
Sainsbury’s Market at
Bluebird on London’s King’s
Road where we trial new
ranges and showcase our
passion for food whether
fresh, regional or seasonal. |
| |
| Modernising
information technology
systems |
| |
| IT is a major enabler as we upgrade and modernise
our company and we have made considerable progress
updating our infrastructure in association with
Accenture. We installed new electronic point-of-sale
equipment and in-store computer systems in 318 stores
and 132 petrol filling stations in 2002/03 and have
continued this programme in the new financial year.
Averaging 18 conversions a week we now have 395
stores and 142 petrol stations using the new technology
and believe this is the fastest such rollout by
a UK retailer. Around 100,000 colleagues will also
have been retrained when the programme is completed
this summer. We are now replacing core systems in
our buying, ranging and merchandising departments. |
| |
| Driving
cost efficiencies |
| |
| We are on track to deliver
in excess of our increased
total of £700 million
cost savings by March
2004. We achieved savings
of £210 million this year
giving a cumulative total
of £460 million and are
confident we will deliver
£250 million of savings
in 2003/04. Further cost
savings of at least £250
million are now expected
in 2004/05 extending our
cumulative total to £960
million. Savings are being
achieved across the business
helping us to become a
more efficient and competitive
operator in the long-term.
We are also reviewing
our Business Centre operation
as the level of resource
for our Business Transformation
reduces and new systems
and processes take effect.
As the level of cost savings
increase and transformation
revenue costs reduce,
operating margins will
continue to improve towards
the levels of our major
competitors. In 2002/03
operating margins before
Sainsbury’s to You increased
by 0.2 per cent to 4.0
per cent (VAT inclusive)
and 4.3 per cent (VAT
exclusive). |
| |
| Rebuilding
our Supply Chain |
| |
| We are implementing unprecedented changes in our
supply chain. Four new automated depots coming on
stream along with new transport and warehouse management
systems will improve service to stores. Our 700,000
sq ft centre in Hams Hall (West Midlands) and a
690,000 sq ft Waltham Point (Hertfordshire) centre
will each serve 80 stores. Our 550,000 sq ft Stoke
(Staffordshire) centre for slower-moving products
already serves 100 stores. It will deliver to 250
stores by the end of the year with the remainder
of our estate served by our new Hoddesdon (Hertfordshire)
depot, opening this autumn. By March 2004 our new
facilities will deliver 60 per cent of our total
network volume giving us a much more efficient and
competitive supply chain. |
