Sainsburys, Tesco's and Morrison's have had their market share reduced by low cost supermarkets, specifically Aldi and Lidl. Adversely affecting their share price. Here is a personal observation of what is wrong and what they need to do to put it right.
Before the recession and wage freeze Sainsbury's lost its market leadership to Tesco's. At the time, if you were shopping in both you would have noticed that Sainsbury's ran out of certain goods. There were empty sections of shelf's and occasionally some common vegetables were missing. They also decided to reduce availability of some items and move them to the top shelf, further reducing the sales. At some point they convinced themselves that customers didn't want them rather than the reality that customers couldn't find them and were making do with substitutes. On the other hand Tesco's had not only got the basic logistics right of keeping the shelf's full, but had also moved into clothing and electrical at the same time. It was around this time I changed from shopping at Sainsburys to Tesco's. However, about 18 months ago I stopped shopping at Tesco's and switched to Asda and Lidl.
Tesco had started off as a "stack 'em high, sell 'em cheap no frills" supermarket but had gradually transformed into selling a huge range. You have to ask yourself how many makes of baked beans do you need to carry for your average shopper to be happy? And that is just one product! All those minority products that only a few want is money sitting on a shelf gathering dust. More importantly, in business terms, it is not making more money (profit). The upshot is you have to put up the prices of the goods that are selling to cover the cost of the goods that aren't.
So why have I moved to Asda and Lidl? Well, they are close together, shopping is not my idea of fun use of my time. If Lidl was close to Tesco's or Sainsburys I may well substitut one of them for Asda. But, Tesco's and Sainsburys had bought the "prime" locations and forced the two to the other end of town. What was intended to be a sterile circle without competition, is now a moat that customers don't want/need to cross. If Asda and Lidil weren't close together I'm not sure I'd use both, but as luck, fait or design would have it! Also, Lidl has all the basic food at a good price and their fruit and veg seem to have a better life in my larder and fridge, probably because it turns over quicker and spends less time on the shelf. However, Lidl has two failings that force me do a part of my shopping in Asda. 1) Lidl is not always the cheapest. Some items (mainly meat) can be surprisingly more expensive. 2) Lidl doesn't have the range. Two makes of baked beans is enough for me but it is things like, Spices, herbs, sauces, ginger, chillies, pulses, etc are missing.
So what do I think Sainsburys and Tesco need to do? 1) Reduce the duplication of products. One own brand and one named brand of baked beans, done! 2) Click and collect. Or at least partly. Reduce the speciality products, but allow customers to order on line or in shop for collection, free. Learn from Amazon have everything available and cheap, but you have to wait. I don't see this as a problem as I'm normally making a list the day before and especially if I'm going to follow a recipe. This would use their existing warehouse and transport infrastructure for fulfilment. 3) Improve the quality of the fruit and veg. I don't want a lettuce that goes off before most of the week has gone, but I also don't want a melon that is still rock hard two weeks after I bought it.
Doing this will reduce the amount of money tied up in stock enabling price cutting without adversely affecting profits too much. It also uses the assets in infrastructure to differentiate them from Aldi and Lidl.
The massive stores seem to have had their time.
