Sainsbury’s is making significant savings from improvements in its distribution network, according to its annual results.
The retailer has seen sales continue to rise despite the downturn in the economy. Preliminary figures for the year to 21st March show sales up 5.7 per cent to £20.4 billion while underlying operating profit was up 15.1 per cent to £616m.
It said the introduction of a new transport management system and processes were helping improve overall supply chain efficiency, reducing the requirement for temporary facilities at peak trading periods, while the benefits of investments made in the previous financial year were coming through in lower costs.
In addition, “the company’s Waltham Point depot has now been reconfigured and new facilities have been opened in North Yorkshire and Kent to support Sainsbury’s ongoing growth.
“To keep pace with the development of non-food, distribution of these ranges has transferred to a 350,000 sq ft site at Tamworth. Sainsbury’s depot in Corby, Northamptonshire, is currently undergoing refurbishment and will support the online non-food operation.”
Non-food is a key target market for Sainsbury’s and it has set up a Non-food Support Centre in Coventry where some 450 staff provide support and infrastructure for this area of the business.
“There is significant opportunity and potential for the growth of non-food ranges as systems and support services such as information technology and logistics are developed for the individual specialist areas. New stores are providing additional sales area for the non-food products and wider ranges are being introduced as stores are extended. The importance and potential of Sainsbury’s non-food business is demonstrated by half of Sainsbury’s new space being allocated to non-food.”
Overall, the group reckons that during the year cost efficiency programmes offset over 75 per cent of its total cost inflation. The changes set in motion as part of the MSGA (Makes Sainsbury’s Great Again) recovery plan were designed to improve the performance of the company’s supply chain and information technology infrastructure as well as realigning the customer offer.