Sainsbury's and the surprising way they filled a £2.5bn sales hole

TRC 022 - Sainsbury's and the surprising way they filled a £2.5bn sales hole

growth Nov 23, 2023

Read time: 5 mins

I was talking to a startup CEO recently about the current funding environment.

Agreeing that it’s pretty tough out there for founders, we discussed how they might get to break even and brought to mind an old story about how you achieve big, hairy goals.

Back in 2004, Sainsbury's had lost their mojo - sales were declining and customer satisfaction issues seemed overwhelming. They were going round in circles wondering how they would fill a huge £2.5bn hole in their sales.

They took the problem to their advertising agency who explained that it’s almost impossible to conceptualise how you go after such a large goal.

So, they broke it down into a much smaller one.

What they realised is that they just needed to get each customer to spend an extra £1.14 each week when they came to store.

Research showed them that customers were ‘sleep walking’ through their weekly shop.

The resulting campaign, rooted in the concept of "Try Something New Today," aimed to disrupt the routine shopping habits of customers, providing them with simple food ideas and recipe cards in-store.

The beauty of this strategy was that they didn’t need to win any new customers or market share to achieve their goals.

The result? A huge turnaround in sales with the £2.5bn goal achieved 3 months ahead of target.

It was achieved by getting the entire business behind the plan - not just a new advertising campaign.

Well that’s great you say. What does that mean for me as a startup founder?

Here are some of the lessons you can apply:

  1. Setting tasks against the big goals can seem overwhelming. Breaking down targets into smaller goals (eg additional sales per day, additional spend per customer per week) makes it easier to visualize the solutions. You can then add these up to forecast the potential impact.
  2. It’s not always about new customers. Improving retention and focussing on ensuring your existing customers continue to buy (and ideally buy more) is a key to building a strong and stable business. Having a business that is a leaky bucket with customers flowing out regularly is never a path to success. Do you know how many of your customers repeat within a 12 month period?
  3. Embedding your vision and goals into your company culture. makes it more likely you will achieve them and will ensure a consistent brand experience for customers. Make sure everyone on the team knows what success looks like and what their role is in achieving goals. Then let them know how they and the business are tracking.
  4. Sainsbury’s approach was underpinned by data analysis, from calculating the additional spend per customer to tracking ROI. If you don’t embrace data to inform decisions, measure success, and adjust strategies, you are leaving success much more to chance. You can’t impact what you can’t measure.
  5. Success tends to be much more rooted in consistent experimentation towards a goal, rather than intermittent revolution. You rarely need to throw away everything you were already doing to make things better. And on the way to step by step success, we might just find a big needle mover.

And what did the startup CEO I spoke to decide?

16 additional sales per day.

That’s what they need to get to cash flow positive.

When they realised this, that’s when the ideas about how to get there started to flow.


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