Sainsbury’s is to use more automated tills and warehouse robots as well as AI forecasting tools to ensure it has the right stock in stores as part of a £1bn cost-cutting effort over the next three years.
Simon Roberts, the chief executive of Sainsbury’s, did not rule out job losses as a result of the changes, but made no announcement on redundancies and said workers would be able to change their roles and adapt to new ways of working.
Roberts said the group’s “legacy systems” were slowing it down and leading to more waste than necessary. “We have got to find better ways of doing things,” he said.
He said Sainsbury’s was “capitalising on [its] scale and investing at a time when many others can’t”. “We are in a really strong position,” he said, promising that Sainsbury’s would buy back £200m of shares this year in a bonus for investors.
Referring to the heavy debt burdens of rivals such as Asda and Morrisons, after both were bought out in private-equity deals in recent years, Roberts said: “Many of our competitors will not be able to make those investments or make them cost-effectively at this point in time. I think this is what will really bring out the winners in this industry.”
As part of up to £850m in annual investment for the next three years, Sainsbury’s will also rejig 180 of its supermarkets to make more space for food, especially fresh produce, while shifting out products also sold in its Argos outlets such as electrical gadgets.
This year, an additional £70m will go towards putting electric vehicle fast chargers beside 70 supermarkets, after their success at 27 existing sites.
Sainsbury’s is also expanding its Nectar loyalty scheme, adding new digital capabilities, and expects the programme to add £100m to its profits over three years, up from a target of £90m over four years.
The scheme’s special discounts for members, launched last year, have been credited with helping Sainsbury’s pull in more shoppers but have attracted the attention of the competition watchdog which is looking at loyalty schemes run by all the major supermarkets.
Sainsbury’s has recently gained market share, winning over shoppers by keeping a lid on prices with £780m of investment over the past three years, making it more competitive with the likes of Aldi, Lidl and Tesco.
Roberts said the group had “done the lion’s share” of the investment required on price and was improving the volume of items sold. While the business would aim to maintain its current position, Roberts said the supermarket could put money into other areas.
“I think we are only really at the beginning of what this business is really capable of,” he said.
Roberts said Sainsbury’s would be making more space for food aisles in 180 stores so more shoppers could have access to its full range and the business would have a better chance of ensuring availability of fast-selling lines.
The group also plans to open 25 more convenience stores a year.