Sainsbury's

Over the last 4 years Jones Lang LaSalle retail team have advised Sainsbury's in compiling their asset and property investment strategy. This resulting scope of work has included the sale and lease back of mature food superstore, the acquisition of their trading freehold's and the establishment of their joint venture with Land Securities (The Harvest Partnership) in the UK.

Matt Birch

1. How long have you been in retail?
 
13 years, 5 as a retail property consultant, 8 as a retailer.
 
2. What changes have you experienced in this time?
 
When I started my career, all the talk was of how the internet would kill off the high street and town centres would become simply advertising space for online retailers, which clearly hasn’t happened. Although we have seen a shift towards the need for retail centres to provide a much more rounded experience, as shopping increasingly became a pastime in the UK with the growth of disposable income.
 
The impact of the internet has been huge though, resulting in much greater consumer knowledge. It has given transparency on price and quality, and broken down geographical barriers for the consumer, in turn driving retailers to be much more rigorous in their customer offer and focus.
 
Now the recession has raised the bar in terms of customer expectations of value for money.
On the shop floor, it has been clear that we cannot be complacent about our status as a popular food retailer and we are always looking to expand and improve our product lines to attract and maintain customers.

Retailers must now assist the consumer in dealing with the challenges of their new reality, for example Sainsbury’s Switch and Save and Feed your Family for a Fiver initiatives have helped our customers bring down the cost of their weekly shop without impacting on quality of life.
 
We have seen other changes at Sainsbury’s too.  We weren’t actively looking to increase floor space at the start of the decade but in the last 4-5 years have embarked on ambitious growth plans and raised more capital to finance our property deals. Following the onset of the recession, we also find ourselves as major catalysts for urban regeneration, increasingly delivering housing, community uses and employment in areas where traditional sources of funding or development can no longer be relied upon.
 
3. What is the most exciting thing about working in retail at the moment?
 
We are undoubtedly in a period of change, which is always exciting. The next few years will throw up opportunities for us to expand, whether through our newer channels, convenience and online for example, or through new space. The current economic climate has meant we have had to be more flexible with our approach to growing our supermarket space and making the most of our property assets.
 
There is also a lot of innovation coming through, and some of the work we are doing with our joint venture partners and across our regeneration projects is really exciting.
 
4. How do you think consumer demands/expectations are changing?
 
The new coalition government and the increased localism agenda, whilst challenging, highlight how expectations are changing. To be successful in retail property right now you have to engage with many different stakeholders and take on their views where possible.
 
From a pure retail perspective, I think consumers are becoming increasing savvy and keen to shop around to get a deal. However, my experience from working at Sainsbury’s has also highlighted that their values haven’t changed and whilst they want to see good prices, they aren’t willing to sacrifice quality and ethics, such as supporting Fairtrade produce and concern for animal welfare.
 
5. What’s the most important issue facing retail over the next 10 years?
 
My personal view is that the most important issue facing retail is the global refinancing required and the impact that is going to have on the consumer’s disposable income. Particularly in the UK, it is difficult to see the current standard of living that most of us enjoy being supportable. Consumers are also much more informed.

It feels like that means that more than ever the retail industry will be characterised by 'survival of the fittest'. However, as we have demonstrated with our results over the last 24 months, many in the industry are very capable of embracing this challenge.