Sainsbury’s targets £1bn savings in tech drive; 75 new c-stores

Sainsbury’s on Wednesday said it planned cost savings of £1 billion thanks to technology and automation, as it seeks to close the gap on market leader Tesco.

Sainsbury’s did not specify if the savings would result in job cuts, as supermarkets increasingly use robotics for sorting food items in warehouses and self-service checkouts in stores.

“We will unlock a further £1 billion of operating cost savings over the next three years, more than offsetting cost inflation,” Britain’s second-biggest supermarket said in a statement.

“High-returning investments in technology and automation will drive big steps forward in efficiency,” it added.

The group expects to open around 75 new Sainsbury’s Local convenience stores over the next three years and also have a significant space rebalancing opportunity to allocate more space to food on the move ranges, the primary mission of most customer visits.

As part of a strategy update, the group added that it was targeting higher market share.

“We’re going to build on what’s driven our success since 2020. We’re determined to be First Choice for Food, ensuring more customers in more of our stores can enjoy more brilliant Sainsbury’s food. That means more space for our food offer, while still delivering the general merchandise products customers want from us. That way, not only will we find more ways to delight new and existing customers, we will also continue growing volume market share,” Simon Roberts, chief executive, said.

“By taking Sainsbury’s to the next level, delivering for customers and colleagues, we will also deliver enhanced returns for shareholders through a share buyback and committing to a progressive dividend.”

However, Sainsbury’s share price slumped following the announcements, with analysts citing upfront costs of the transformations offsetting future savings.

Sainsbury’s traded down 3.8 per cent at 265.10 pence on London’s benchmark FTSE 100 index, which fell 0.2 percent overall.

Tesco was also hit by the negative investor reaction, with its share price dropping 2 per cent.