The Sainsburys Strategy Dilemma faces all businesses
With Sainsburys financial results this morning, the company clearly has some work to do to at least keep up with its competitors.
While the retailer is innovating with the first-ever "till free" store in the UK (Holborn, London), where shoppers scan bar codes on their phone and pay via a preloaded app, its woes continue in the form of lower sales revenue and an aborted merger with Asda.
The company’s decline is no surprise, as those retailers in the murky middle – appealing neither to the premium shopper nor the budget shopper – are lost in no man’s land and are forced to decide whether to move upmarket or mass market if they’re to be successful. We know that today’s very challenging UK retail environment (not least from Debenhams, BHS, House of Fraser), that this is not just theory but a rule of markets and marketing.
What must Sainsbury’s do now to turn itself around? Clearly continuing to innovate, but actually making a tough choice: which customers will deliver value, and which should it not serve?
This strategic decision faces every business, and those that select the right path based on customer insights are rewarded handsomely.