Sainsbury (j) Share Discussion Threads

[spob] 07/12/2020 19:34

looks like ADVFN is blocking urls

I will paste the article tomorrow

busy right now

[spob] 07/12/2020 19:13

Come on guys

why do you need to see something written in the FT

you can easily work it out for yourselves

it's obvious


the big grocery retailing companies have dug themselves a big hole

the hole is getting bigger by the day

they can't swallow their pride and fill in the hole


online grocery delivery is eating these companies away

margins will be extinct soon, if something does not change

[muffinhead] 07/12/2020 13:23

PS. ALDI has outsourced home delivery

[muffinhead] 07/12/2020 13:11

Seems incredible that some of the biggest companies have a penchant for digital self harm. So many systems tried around the world for little benefit.

Shopping in-store with experiences seems the most attractive to me.

Shopping by click and collect would be my second choice.... with the option of paying for delivery by the likes of deliveroo, uber, doordash etc.

Supermarkets should outsource the home delivery. Online delivery option could be integrated into the web platform. It would save a fortune for Tescos, Sainsburys, Asda and Morrisons.

[grahamite2] 07/12/2020 12:01

Indeed so Alphorn, and it would preserve buying might. But I can't see that any of the benefits would justify a massive loss like 8% except on a very short term basis as a means to an end. Some new equilibrium would need to be clearly foreseeable.

[alphorn] 07/12/2020 11:52

G2 - that sector may be absorbing some costs that would otherwise sit elsewhere.

[grahamite2] 07/12/2020 11:50

online picked from store make a loss of around 8% when delivery charged

In that case, what's the point of it? We all know what loss leaders are about - draw people to the store for the loss leader, hope they stay to do the whole shop at normal prices. But why operate a stand alone service if it makes such a horrendous loss? Answer is, you just wouldn't. I have to assume the management has information the journalists do not.

[tim 3] 07/12/2020 11:35

Sorry wont let me post link try searching 'Why supermarkets are struggling to profit from the online grocery boom' Its an FT article.

Worth a read it reckons online picked from store make a loss of around 8% when delivery charged.

[tardelli2] 07/12/2020 11:12

Back in around 2000 I remember a an MD and a retail Director who were not in favour of online and could not see it ever being profitable . I remember attending a meeting in Holborn re that very subject . However shortly after they were both ousted . I remember an email sent by one of them which wasn't very complimentary about the then CEO . Needless to say the email was down in minutes but I had the good fortune to be one of the few who read it . I can't help wondering if we'd stayed away from online or capped it just for the elderly or needy where the profit line would have gone . Would the competition have ploughed ahead ? Too late to worry now I just hope with the surge in online it is much closer to break even and will reflect in future figures .

[tim 3] 07/12/2020 10:17

Agree, no problem with people with mobility issues using home delivery but the majority of people who use it are younger, often much younger and perfectly able to visit a store.No wonder we have an obesity problem in this country.

[netcurtains] 07/12/2020 09:58

TIME RICH people dont want to spend all day clicking and clucking computers - they want a good shopping experience as part of their retirement.

[netcurtains] 07/12/2020 09:56

Dont get me wrong grahamite2... I'm not talking about the frail.

I'm talking about the normal boomers: 55-75 age group.
They are, generally speaking, fit and able and relatively loaded with cash.
They are the new shopping elite and they are growing every year
for the next 15 years.

[loganair] 06/12/2020 17:48

I understand Ocado, the specialist home delivery supermarket, margins are waver thin at just 1% which is far less then Sainsbury's bricks and mortar margins.

With all the added costs over those of Ocado, I can not see how the likes of Sainsbury's are making any profit from their home delivery service.

[netcurtains] 06/12/2020 17:26

spod you said: "Some people are very busy" : answer: NOPE -
if you look at busy people in cities - 90% of them go out of their offices and buy their own lunch - they dont get it delivered to the office reception desk. So there is no rational reason for this national laziness when it comes to weekend food shopping.
In fact with more boomers retiring more people will have a lot more time to shop (most of these people are relatively rich too). Retail will be coming back big time with real footfall with real rich people.
As I said before Sainsburys needs to up its game re instore catering to make going to sainsburys for boomer pensioners a good experience - something to look forward to.
Follow the money otherwise Waitrose will take the lot!

Cheers Net.

[essentialinvestor] 06/12/2020 17:00

spob, they mentioned that in 2014, not since.

TESCO margins on their UK food business peaked around that time

at circa 5.9%, from memory.

Margins have collapsed since then.

So in other words it may be possible that around 2014 their home delivery

operation was profitable.

[spob] 06/12/2020 16:54

I don't blame customers for using the service

that's their choice

some don't have a choice, and some are very busy

[netcurtains] 06/12/2020 16:25

spod: Its nothing about profit - getting a third party to select your food is really bad for you - it should not be encouraged. EVERYONE WHO IS FIT AND HEALTHY - should at the very least select their own food they are going to consume! Its the ground zero of being a fit and able person.

I would, if I was the government, slap a massive tax on home delivery of food - if they dont we'll end up a nation of vegetables with no ideas of our own.

[spob] 06/12/2020 16:18

If Tesco says they can make a profit after all of the above costs

to be honest, i don't beleive them for one minute

they are clearly not including all of the true costs in their calculations


basically they are kidding themselves

[spob] 06/12/2020 15:53

Re 21429

EssentialInvestor

" ..how profitable, or otherwise, is their home delivery operation? ..."



You don't need Sainsbury's or anyone else to tell you whether or not online grocery delivery is profitable


firstly look at the current overall profit margins for the company as a whole

they are miniscule - always have been

then condsider all the ADDITONAL costs involved in providing this online grocery service


delivery costs

vans
drivers wages (hourly rates have gone up due to increases in min wage)
driver training costs
driver uniform costs and ppe
insurance tax mot etc
fuel
parking tickets
routine maintenance and tyre replacement costs
van cleaning costs
van accidental damage costs
van conversion costs and separate refrigeration compartments for ambient, chill and frozen goods
handsets, communication equipment and navigation equipment for drivers

picking costs

wages for online department managers and supervisors
wages for staff loading up the vans
shoppers wages (hourly rates have gone up due to increases in the min wage)
shoppers training costs
shoppers uniform costs
costs associated with covering staff sickness, pensions, staff discounts etc
shoppers equipment trolleys, handsets

infastructure costs

website costs
adapting stores to accomodate an online operation
loading bays and parking areas for vans
computers and telephone lines
additional chill and frozen refrigeration units in stores for the online operation
electricity costs for the above
maintenance for the above


Double staff costs - paying store staff to put goods on the shelf, and then paying shoppers to take the stock off the shelf again. Lol

Store inefficiency costs - where you have so many online staff picking in a store, they slow the replenishment operation and vice versa


as you can see, the list goes on and on and on and on

i am sure there is much more, not listed above


you don't need to be a rocket scientist


there is no profit in selling groceries online and delivering them to peoples doorsteps


anyone who disagrees, is either trying to kid you or kid themselves

[loganair] 06/12/2020 09:09

FTSE 100 retail opportunities:

Other UK shares that could benefit the most from a stock market recovery include retailers. Although some retail stocks may find it hard to adapt to a changing operating landscape, the likes of FTSE 100 stocks Next, Tesco, Sainsbury’s and Morrisons appear to be successfully adjusting to an increasingly online world.

All four stocks have invested heavily in expanding their online presence since the start of this year. This may provide them with dominant market positions versus rivals, which may strengthen their financial prospects in the long run. They also have deep pockets through which to further shift resources from in-store offers to digital opportunities. After a mixed year for their share prices, they could offer capital appreciation opportunities relative to other UK shares in a likely long-term stock market recovery.