NEWS: Can Sainsbury’s bite back?’

Competition between the four major supermarkets has never been more intense. John Tylee investigates the state of play

Competition between the four major supermarkets has never been more

intense. John Tylee investigates the state of play



If the Cassandras are right, the 11-year love match between Sainsbury’s

and Abbott Mead Vickers BBDO is heading irrevocably towards the rocks.



On the face of it, the case for the doom merchants looks strong. In the

past few months, Sainsbury’s has been usurped from its position as food

retailing’s standard-bearer and bounced into price-led advertising

controlled by a new marketing director with a reformist agenda.



One agency head with extensive retail experience is willing to bet the

relationship won’t survive the purgative effect of Kevin McCarten, the

former Woolworths trading director who now occupies Sainsbury’s

marketing hotseat.



And he’s not alone. Food retailing’s most famous name, for so long

synonymous with David Abbott’s creative eloquence, has become so

preoccupied with tactical, price-led promotion that many believe it has

committed itself to a path Abbott Mead is neither willing nor able to

follow. In stark contrast to the elegant work it has superseded, the new

advertising is under attack for looking cheap, for having the client’s

fingerprints all over it, and for being out of kilter with the

Sainsbury’s heritage.



While Tesco has fostered an innovation culture, Sainsbury’s structure,

set by its former chairman, John Sainsbury, is hierarchical and

lumbering. His cousin, David, who succeeded him at the end of 1992, is

more of a team player, but the apparent result is indecisiveness, as

long-serving senior managers get used to thinking for themselves rather

than being told what to do.



Whether this apparent loss of identity is because Sainsbury’s has lost

its way or because its main rivals - Tesco, Asda and Safeway - are

finding theirs, is an open question. What’s generally agreed is that it

would gain no particular advantage by shooting the advertising messenger

and reviewing the business. ‘Sainsbury’s may have been out-marketed,’ a

source close to the company says. ‘But it has never been out-

advertised.’ Even the bluff McCarten, while acknowledging a less than

successful year for Sainsbury’s, dismisses speculation that he and

Abbott Mead are destined to part, saying: ‘Everyone wants to know when

I’m going to ditch the buggers. But it ain’t going to happen.’



But talk of crisis - fuelled last year when Tesco overtook it to become

Britain’s biggest retailer - should not be allowed to get out of hand.

Sainsbury’s remains the most profitable UK supermarket brand. As Clive

Vaughan, a retail analyst at Verdict Research, says: ‘It’s a bit like

saying Schumacher is only at second place on the starting grid.’



Another marketing expert compares Sainsbury’s to a ‘supertanker with the

engine stopped. It’s moving on but more slowly than before and needs to

get its engine going again.’



What’s plain is that Sainsbury’s apparent drift is the symptom of

ailments that go much deeper than its advertising. They are the legacy

of many years of under-investment combined with over-exploitation of the

brand’s potency to keep margins high. Its long-established advertising

claim that ‘good food costs less at Sainsbury’s’ was, to put it mildly,

disingenuous and masks what has been a relentless pursuit of profit. The

company’s operating margins have never dropped below 8.3 per cent in the

past five years compared with 5.8 per cent for Tesco and 4.3 per cent

for Asda.



But there has been a price to pay, and Sainsbury’s stands accused of

exploiting its brand to a dangerous degree, caning manufacturers

fighting for its precious shelf space.



One former confectionery company marketing executive who had the

unenviable job of negotiating with Sainsbury’s buyers - ‘a bunch of mean

and ruthless bastards’ - still winces at the memory. Even now, 58 per

cent of Sainsbury’s products are own label, a figure that is about 10

per cent higher than its major rivals. ‘The company needs the support of

major brands now more than ever,’ he says. ‘Piling the aisles high with

own-label cola is hardly terrific for the average customer.’



Preoccupation with margins and a willingness to sacrifice brand choice

to maintain them lie at the heart of Sainsbury’s problems. Today’s post-

recession consumer demands the quality of the late-80s boom years

coupled with the competitive pricing of the austere 90s. Sainsbury’s has

the quality in spades, but keen prices have been its Achilles heel.



Sainsbury’s insiders believe its vulnerability on prices was first

exposed by the 1992 ‘buy and fly’ promotion with British Airways, which

allowed people to qualify for discounted flight tickets. As customers

totted up their till receipts, the full impact of the cost of shopping

at Sainsbury’s was brought home. Even the company’s launch of the mould-

breaking recipe commercials in 1991, in which celebs presented a series

of aspirational but affordable recipes, has only reinforced old

prejudices, critics claim.



‘In the early days, it got people to trade up a bit but it went on too

long,’ a source close to Sainsbury’s says. ‘And when Denis Healey

started recommending smoked salmon, scrambled eggs and champagne it

simply reinforced the perception of Sainsbury’s as being like Marks and

Spencer - OK when you can afford it, but not for every day.’



‘The ads would have been a good idea if they had been backed up with

other initiatives,’ says Rick Bendel, joint chief executive of Publicis,

which runs the pounds 5.6 million Asda account. ‘But there’s nothing in

them that’s unique to Sainsbury’s.’



The loss of its once unrivalled positioning presents Sainsbury’s with

its biggest test. Tesco, for so long caught between a rock and a hard

place because it could offer neither top-quality products nor match the

discounters on price, has shed its once unfashionable image and stolen

many of its rival’s clothes. Not least in developing the ‘supermarkets

as brands’ concept that Sainsbury’s pioneered.



Once garish, outdated and down-market, Tesco has been transformed by a

single-minded strategy and Lowe Howard-Spink’s astute advertising. Today

it presents a classless, confident face with messages about price and

quality that are not mutually exclusive. Contrast that with the

Sainsbury’s image which seems to have passed its sell-by date. An

impression that is exacerbated by the orange-and-brown livery of its

stores, which makes Sainsbury’s seem dated.



Tesco’s triumph climaxes seven years of what has been a concerted effort

to destroy prejudice and narrow the gap between perception and reality,

while building rapport with its customers.



Dudley Moore, as the hapless Tesco underling chasing chickens around

France, established the chain’s quality credentials. They, in turn,

helped sustain it through the harsh ‘every little helps’ years of the

early 90s and into a more upbeat present in which US-style in-store

service overcomes even the ‘customer from hell’ played by Prunella

Scales. ‘The commercials are a measure of Tesco’s confidence,’ Marc

Cave, Lowes’ board account director on the business, says. ‘Now we have

to make sure we don’t take our foot off the pedal.’



Safeway, devoid of any image whatsoever three years ago, has also begun

making successful inroads into Sainsbury’s traditional market. The

catalyst is Harry, not only every mum’s favourite little boy, but a

versatile character who is as effective at explaining the chain’s ABC

loyalty card as he is at publicising the latest offer on cut-price

strawberries.



‘Our target is high-ticket spenders, that’s to say mothers with young

children,’ says John Ward, the senior board planner at Bates Dorland,

where Safeway’s ‘lightening the load’ campaign was created. ‘Sainsbury’s

hasn’t spotted what’s been a major demographic shift with many women now

having children later in life, often giving up highly paid professional

jobs to do so,’ he claims. ‘Their loss of income has bred massive guilt

and determination to match quality with value for money.’



Meanwhile, Archie Norman’s Asda has gone back to what it does best. It

has repositioned itself at the value end of the market by successfully

offering permanently low prices to ‘ordinary working people and their

families’ even if the bum-patting ‘Pocket the difference’ TV campaign is

one of the most irritating around. As for Sainsbury’s, the value-for-

money promotion which has been running since the beginning of the year

looks like a temporary patch-up job. But what new tune will it be

playing?



Several pressing issues demand McCarten’s attention, including whether

or not Sainsbury’s should jump aboard the loyalty card bandwagon. It has

been sniffy about the idea and maybe rightly. The savings customers make

with them are minimal and their ability to track customer purchasing

patterns is unproven. It may even be that by holding back, Sainsbury’s

has gained an advantage. As Verdict’s Vaughan points out, such schemes

are costly to run and inhibit the ability to offer further discounts.



Can McCarten pull the ship around? Some who know him talk of a pedant

weaned on Procter and Gamble’s formulaic advertising approach who will

need too much time to assess Sainsbury’s strengths and weakness when

swift action is vital. The consensus view is that Sainsbury’s should

ditch its ‘nanny knows best’ style and find an all-encompassing campaign

that will reinforce its quality heritage while giving it some solid

value-for-money credentials.



Running in its favour is the brand’s undiminished social cachet. ‘It’s

still the sign of a rising area when Sainsbury’s carrier bags are seen

being unloaded from the car,’ Ward comments.



McCarten must break Sainsbury’s habit of allowing different initiatives

to pull it in all directions. ‘There’s no single big idea that will make

Sainsbury’s different,’ a leading retail expert says. ‘Tesco, Asda and

Safeway have shown it’s about doing lots of little things well.



Sainsbury’s will be back - but its situation may get worse before it

gets better.’



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Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).