Sainsbury's has announced ambitious plans to slash operating costs by £1 billion over the next three years, aiming to deliver substantial returns to its shareholders.
The supermarket giant intends to invest in technology and automation, prioritizing the automation, optimization, and streamlining of high-volume tasks wherever feasible, as revealed to shareholders on Wednesday.
The company is streamlining its general merchandise networks, planning to utilize fewer, larger depots in the future. Despite these measures, Sainsbury's has assured that store closures and job cuts are not currently on the agenda.
Sainsbury's detailed its commitment to a "progressive dividend policy" from the beginning of the next financial year, along with a renewed share buyback initiative. The company plans to repurchase £200 million worth of shares over the course of the next financial year.
Despite these strategic moves, Sainsbury's shares experienced a 3.74% decline on Wednesday, falling to 265.30p.
The supermarket chain has already realized savings through initiatives such as reducing deliveries and minimizing waste, although it did not provide a breakdown for the new cost-cutting plan.
Furthermore, Sainsbury's aims to streamline its general merchandise and clothing offerings across many stores to enhance its food ranges available in-store. Presently, the full food range is accessible in only 15% of Sainsbury's stores, but the company aims to expand this to all 600 supermarkets, focusing particularly on 180 "highest potential" sites.
Sainsbury's also plans to intensify its focus on non-food lines available in stores while continuing to expand its "Food First" strategy. The company intends to open 75 new Sainsbury's Local convenience stores over the next three years.
In its strategy update, Sainsbury's pledged to achieve growth in food sales volumes ahead of the market by March 2027. It also plans to expand its network of rapid electric vehicle charging points to over 100 stores by the end of the 2024-25 financial year, up from 20.
Additionally, Sainsbury's is set to further enhance its "Nectar Price" offerings, with shoppers currently saving an average of £12 on a weekly £80 shop using Nectar Prices.
Further adjustments to the Argos division are underway, with potential closures of standalone Argos stores and their integration within supermarkets as click-and-collect points.
Earlier this month, Sainsbury's announced its phased withdrawal from banking operations, aligning with its "Food First" strategy, and intends to offer financial products through dedicated financial services providers. Photo by Wikimedia commons.