• Sainsbury’s boss Mike Coupe says BHS demise highlights need to “move with the times”
  • Coupe insists the grocer’s rationale to acquire Argos fits that long-term goal
  • Sainsbury’s reveals plans to invest up to £75m in refurbishing larger stores
  • Learnings from six pilot stores will be rolled out across 25 supermarkets

Sainsbury’s boss Mike Coupe says the falls of BHS and Austin Reed have reaffirmed the grocer’s rationale for acquiring Argos.

The two big names plunged into administration last month as the high street continues to battle against changing consumer habits and a slowdown in footfall, as shoppers instead opt to visit retail parks or purchase goods online.

Sainsbury’s expects to complete the £1.4bn purchase of Argos owner Home Retail Group in the third quarter of its current financial year, and Coupe believes the plights of BHS and Austin Reed have served to support the supermarket giant’s attempts to “move with the times”, rather than raise questions over its ambitious acquisition strategy.

“The nature of retailing is if you stand still, you’ll get overtaken by the competitive dynamics.”

Mike Coupe, Sainsbury’s

Speaking after Sainsbury’s swung back into the black with a statutory pre-tax profit of £548m for the year ended March 2, Coupe said of BHS and Austin Reed: “In both cases perhaps it’s reflective of the fact that retailing doesn’t stand still and the need to challenge ourselves, to challenge the business to move with the times. That’s quite significant.

“The rationale for acquiring Argos is that our customers will increasingly demand from us that they can shop with us whenever and wherever they want, whether that’s in a conventional store or increasingly online through the use of digital and mobile technology, with deliveries to wherever they want, whether that’s at home or a convenient place to pick things up.

“We think it’s very much at the sweet spot of where customers are moving to, and the nature of retailing is if you stand still, you’ll get overtaken by the competitive dynamics.

“It’s important that we reflect that and make the right choices, not just for the short term for our business, but also the medium to long term.”

Store refurbishment

Despite agreeing to shell out £1.4bn to acquire Home Retail – an offer that has been recommended to shareholders by the group’s board – Sainsbury’s finance boss John Rogers vowed to plough a “significant investment” of £50m to £75m into revamping 25 of its supermarkets this year.

The grocer has already been trialling a new format at six of its larger stores in Alperton in London, Devizes in Wiltshire, Emersons Green in Bristol, Harpenden in Hertfordshire, Morecambe in Lancashire and Tamworth in Staffordshire.

The pilot includes changing the layout of stores to make them more convenient to shop, dedicating more floor space to Sainsbury’s non-food offer, making better use of fresh food counters and trialling the Smart Shop mobile phone app and new checkouts to speed up the shopping trip.

Coupe said he was “pleased with the results” and believed the grocer had “pushed the boundaries of what we are trying to understand and achieve” with the new formats.

“If we reflect on the things that have gone well, certainly the balance of space between food and non-food has been a success,” Coupe said.

“A differentiated proposition, which is something we are striving for, particularly around the counters, has been a pretty good success, and making it more convenient for our customers generally, but specifically around food to go and checkout operations are things we’ve been really pleased with.

“We will continue to learn as we go along.”

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