Supermarket giant Sainsbury’s had some big news on Wednesday and it seems it’s toning down a previous proactive-fashion strategy.

Floor space dedicated to fashion and general merchandise in many of its stores will be cut as it said “our ‘Next Level Sainsbury’s’ strategy builds on the success of the Food First strategy we launched in November 2020. This put food back at the heart of Sainsbury’s”.

It didn’t mention that much about clothing, but its CEO did say the new thinking “means more space for our food offer, while still delivering the general merchandise products customers want from us”.

He said the retailer “will create more space for food in many locations by reallocating some space currently occupied by general merchandise and clothing”.

And in addition to this it “will tighten the focus of our general merchandise and clothing ranges in stores, aligning them more closely to customers’ grocery shopping missions and ensuring ranges are relevant and irresistible at the right moments. In Sainsbury’s, only half of our primary customers buy our general merchandise and clothing products, representing a significant opportunity, particularly as we grow our numbers of primary shoppers”.

The new approach comes as the company has seen success in attracting more customers to its food offer lately but also after years in which it had dedicated more space to fashion and expanded into third-party brands.

In the absence of any further information, we have to assume that the mega-sized stores will continue to offer a broad fashion selection, but that many others will scale back. We also have to assume that fashion will remain a key category online.

It’s unclear where that leaves some third-party brands, such as Sosandar. A year ago it entered into an agreement to sell a curated collection of its products through the supermarkets business. The new wholesale agreement saw a selected range sold through Sainsbury’s during 2023, initially online only, but with selected stores added later in the year.

Argos in focus

Interestingly though, while the company will also sacrifice general merchandise space in its stores, it did say that it’s going to double down on its focus on the Argos chain, the giant general merchandise business that’s now based both online and within Sainsbury’s stores.

Under the tagline “More Argos, more often”, it said it would “unleash and transform Argos around [a] curated range, famously convenient experience and great value — so more customers buy more complete baskets more often”.

It added that “Argos has a structurally advantaged low cost-to-serve operating model, backed by the scale of being part of the UK’s second biggest general merchandise retailer and delivering a Click and Collect and delivery proposition unmatched by any other general merchandise retailer in the UK.

“We have further transformed this model in recent years… [but] we have further to go in terms of Argos store estate changes and we will also further refine the store operating model, with clustered stores replacing a one-size-fits-all approach. This better recognises the significant variation in Argos store size and role. Early trials suggest significant cost-to-serve reductions alongside improved customer satisfaction as a consequence of better tailored ranges and service.”

Half of UK households shop at Argos every year and it has the third most visited online retail website in the UK. More than 70% of sales start online, 70% of sales are collected in store and nearly 70% of online Click and Collect orders are available for immediate collection. However, customers visit Argos on average only three times a year and it sees “significant opportunity through increasing awareness of the Argos service proposition, and increasing frequency of visit and basket spend”.

It plans to extend the range in selective areas and enter some new product categories, “often through supplier-direct fulfilment, where we will sell more third-party products through a stockless operating model”. It will be interesting to see whether this might mean fashion and sports.

It will also invest further in the website, app and customer relationship management capabilities to “elevate Argos’s share of mind, encourage more browsing missions and inspire customers to trade up within product ranges, where we will continue to extend our range of premium brands and will strengthen our design-led own label ranges”.