Along with Morrisons, Tesco and Asda, the UK supermarket Sainsbury’s is in the ‘big four’ of the UK grocery market with over 70% of the market share between them. With that type of dominance, it’s hard to see how they could ever get into trouble.
This year, however, the company (who also owns Argos) announced that it was going to close 125 off the stores it owns in the next five years. 55 of those will be Sainsbury’s supermarkets and 70 of them will be Argos stores.
A Costly Gamble
The reason these closures were planned is to get rid of its least profitable stores as it plans to save around £500m in costs. The initial result, however, has meant that £203m has been wiped off the balance sheets.
This has left the company with a profit of just £9m in the first half of the year.
For Sainsbury’s, this is a calculated gamble about building for the future and becoming more profitable. The supermarket chain has announced that it will be opening up new stores around the country in the hope that they will be much more profitable.
Fall In Sales
The company has also announced that overall sales have dropped by 1% with the company blaming the weather, which is seemingly a poor excuse. The pressure for profits is high and the company will be desperate for their integration with Argos to work.
That seems to be going well and there is an increasing amount of smaller Argos retail stores inside Sainsbury’s supermarkets.