Sainsbury’s results highlight retail risks and construction opportunities

Sainsbury’s results for the last year highlight the pressures that are reshaping the retail sector and the demand for retail premises. Sainsbury reported a 14% fall in underlying profits to £587 million as the supermarket price war continued to hurt the retailer. The company, along with the other ‘big’ four supermarkets continues to face strong competition from each other and the discount supermarkets.

In addition, whilst consumer confidence and spending are on the rise, when and where consumers spend their money continues to evolve. Consumers increasingly associate convenience with local or on-line purchases, rather than a weekly shopping trip. 

Sainsbury and Tesco have both developed an extensive network of smaller local stores in response to this shift in spending patterns. 

Sainsbury’s acquisition of the Home Retail Group which owns Argos is part of its strategy to extend its product offering of (higher margin) non-grocery products through its store network.  

Speaking on the BBC's Today Programme, Chief executive Mike Coupe said that the deal would allow customers to choose from more than 50,000 products and collect them in 2,000 outlets within four hours, which he described as "pretty compelling". The delivery of such a strategy should also offer significant construction opportunities, as the company ensures that the logistics systems are in places to support the timely supply of products and existing stores are adapted to accommodate an increase in click & collect purchases.