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Sainsbury's looks past food in web sales push

Supermarket group Sainsbury’s has announced a rapid expansion of its “click and collect” service, designed to boost sales of non-food items such as homewares and electrical goods ordered via its website.

Currently available in 300 stores, this will be expanded to 400 stores by early June, and more than 800 by Christmas, the retailer said, and the service will be rolled out to local convenience stores as well as large supermarkets.

At interim results last month, Justin King, Sainsbury’s chief executive, said he wanted the group’s non-food division to grow to 45 per cent of total sales by 2020, up from about 25 per cent today.

“General merchandise is a key area of focus for Sainsbury’s, and we’re enjoying growth rates of 20 per cent in some areas,” said Helen Buck, director of convenience. More than a third of non-food online orders are currently coming through click and collect, she added, showing that consumers often prefer to pick up their goods from a nominated store rather than wait at home for a delivery.

“The supermarkets have enormous capacity to fulfil non-food online orders, but it’s been a much slower market than people thought,” says Clive Black, retail analyst at Shore Capital. “The actual level of non-food online sales is still very low, and at Sainsbury’s, it’s markedly lower than at Asda or Tesco.”

Initially, supermarkets thought home delivery was the most likely and effective way of processing online orders, but multi-channel options are increasingly proving to be what consumers want.

“An awful lot of deliveries are not completed as people aren’t at home,” said Mr Black. “To pick up from a store gives the consumer and the retailer more flexibility, as other retailers such as Home Retail have shown. It’s the ideal solution for both parties.”

Mr Black believes that involving local convenience stores in this process could also ease the delivery and returns process. “Obviously, you can’t go down to your local Tesco Express and pick up a sofa, but this model works well for smaller packages. Returns are a big part of the online industry, and how retailers handle returns is central to profitability.”

Source : Claer Barrett - FT.com
www.ft.com/cms/s/0/c5d113a8-8a18-11e0-beff-00144feab49a.html#axzz1NmFApt1d

29 May 2011
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