Sainsbury moves into financial services
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Your support makes all the difference.Sainsbury's is gearing up to launch a series of initiatives between now and Christmas in an attempt to claw back market share lost to rivals such as Tesco.
A key part of the plans will be a move into financial services which is likely to include a Sainsbury's "bank account", similar to the ClubCard Plus scheme launched by Tesco earlier this year.
Other plans include a decision to fight the market share battle on Sainsbury's strengths such as quality, choice and customer service while shifting attention away from price.
The initiatives are unlikely to win much support in the City as Tesco has already moved into financial services and price has proven to be a key weapon in the supermarket store wars.
New market share figures are expected from research group AGB today. They are likely to show that Sainsbury's is still failing to narrow the gap between itself and Tesco.
The last released figures for the four weeks to 25 August showed Tesco's share of the more narrow definition of the grocery market had risen to 21.4 per cent. Sainsbury's share had dipped to 18.6 per cent.
Sainsbury's first move into financial services is unlikely to be anything more advanced than Tesco's ClubCard Plus scheme, which is essentially a budget account offering beneficial interest rates.
Sainsbury's scheme will operate separately from its Reward loyalty card launched in June. Like Tesco, it will not run the accounts but will co- operate with a clearing bank. Sainsbury's takes the view that banks are unpopular and that supermarket groups enjoy greater trust among their customers. Other financial services, such as the provision of loans and overdrafts, are expected in the longer term.
Tony MacNeary, of NatWest Security, said Sainsbury's would probably be accused of copying Tesco's move into financial services. "It is still proving a struggle for them to differentiate themselves from the rest of the sector," he said.
Frank Davidson, of James Capel, is also unconvinced. "I don't see Sainsbury's breaking into the financial services market in a big way They've got to resolve the issues in the core food retailing business first. They can't out-Tesco Tesco."
Sainsbury's says its Reward card has more than 6 million members and that the sales increases of 2-3 per cent are sufficient to cover the cost of administering the scheme.
Tesco and Asda have consistently dragged Sainsbury's back into a price battle. Last month Tesco launched its "Unbeatable Value" campaign to cut the price of 600 lines. Sainsbury's pledged to match Tesco's prices.
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