Sainsbury’s has improved availability at its 335-strong chain of convenience stores by 2.2% and reduced wastage to an all-time low, according to Simon Stokoe, senior supply chain manager, Sainsbury’s convenience.
Speaking at the IGD Supply Chain Summit 2010, Stokoe told delegates how Sainsbury’s has had to adapt supply chain operations, systems, processes and its distribution network to support the convenience channel, which is growing at 25% year-on-year and serving 4m customers per week.
“Trying to grow a convenience business is fundamentally different to a supermarket business,” he said.
Sainsbury’s convenience business is defined by format. It has food-on-the-move stores in city centre locations and two types of neighbourhood store, fresh local and neighbourhood standard.
However, Stokoe revealed one third of the estate has non-typical trading patterns due to their location:
- 63 stores are near universities
- 27 stores are near train stations
- 14 stores are near parks
- 18 stores are near the coast
- 24 stores are near city centres
“Customer expectations are high and the business model is complex – it’s format driven and different stores behave differently,” said Stokoe. ”It’s not one size fits all.”
In addition, Stokoe reported about 80% of the range in convenience store sells less than two cases per week.
“That’s one of the toughest things for us to manage,” he said.
Stokoe said Sainsbury’s convenience business was focused on leveraging the best of the supermarket brand and delivering the best shopping experience and it had taken the following steps.
It has stripped out complexity and was now doing things the right way, at the right time.
This has improved data accuracy, said Stokoe. “The key is getting someone to do the right thing everyday.”
Sainsbury’s has changed its structure and created convenience-specific teams and systems have been segregated to create independent orders too, although they remain integrated in the main business to share best practice.
Store processes have been simplified and moved to first time replenishment to enable stores to focus on customers. Stock control has been restricted to one hour a day. “We only count when we can count accurately and it’s improved insight and more consistent availability,” said Stokoe.
Stores are supported by convenience retail support teams, which provide a link between the depots and can deal with detail such as regionality and local events.
Sales forecasting is now format centric with one agreed process and, where possible, visibility for suppliers. According to Stokoe, this has improved availability and wastage is the lowest it’s been.
Sainsbury’s is increasing its flexibility with multiple pack sizes, which are a win for all, said Stokoe. They aid availability and increase reach in stores, he said. Deliveries to stores with the lowest fresh food participation are now every other day, he added.
In terms of KPIs and reporting, Sainsbury’s has introduced a convenience-specific mystery shopper audit, which measures availability of bakery and newspapers in the morning and ready meals in the evening, for example.
Stokoe said focusing on within day availability and looking at sales by the hour had generated a 2.2% increase in customer availability. Critically, convenience stores have the same availability targets as supermarkets, he said.
Stokoe said convenience was a great opportunity but was going to get tougher. “Customers expect more and we are all fighting for sites,” he said. Sainsbury’s alone is opening 50 new c-stores this year.
But the main weekly shop is in decline and consumers are using convenience as small supermarkets, as well as for cash, paying bills, newsagents etc. “They are also catering for distress purchasing,” he said, “therefore availability is key.”