Sainsbury's is making HUGE changes to its range and Argos stores

SAINSBURY'S is making a number of changes to its product range and Argos stores.

Britain's second-largest supermarket has unveiled plans to overhaul its supermarkets with a focus on creating more food space, saying it wants to cut costs by £1 billion over the next three years.

Sainsbury's said it will reduce its general merchandise and clothing offering in many stores to increase its food range.

It means the company's 'Tu' clothing departments could be reduced in size across dozens of major stores.

It will also continue to close more standalone Argos stores and move them into supermarkets as click-and-collect points.

The updated strategy – called Next Level Sainsbury's – will cut costs by £1 billion over the next three years, with a focus on technology investments to deliver automation and savings.

It says it has no plans to close stores and is not announcing any staff cuts as part of the overhaul.

“High-return investments in technology and automation will deliver major leaps in efficiency – automating, optimizing and prioritizing high-volume tasks and driving better forecasting,” the report said.

Sainsbury's also outlined plans to open a further 75 convenience stores, adding to its existing 800-strong range, while it will roll out fast electric vehicle (EV) charging points to more than 100 stores by the end of the 2024-2025 financial year. increased from 20 currently.

Chief executive Simon Roberts said: “We are committed to being the first choice for food, so more customers can enjoy even more excellent Sainsbury's food in more of our stores.

“That means more space for our food offering, while still being able to deliver the general products that customers expect from us.”

Sainsbury's says it only has a full food range in 15% of stores, but is now aiming to expand its grocery offering in all its 600 supermarkets, with expansion efforts focused on 180 'high potential' locations.

In its strategy update, the group said it will also “sharpen” the focus of its non-food ranges, but stressed it is not retreating from offering non-food ranges.

As for the changes to Argos, the company declined to provide details on how many stores could be affected over the next three years.

Since taking over the retailer in 2016, the company has closed a number of branches in order to bring many of them into supermarkets. Late last year it said it would reduce the number of branches to 180 by March.

“We have further to go in terms of changes to the Argos retail domain and we will also further refine the store operating model, with clustered stores replacing a one-size-fits-all approach,” the group said.

The company will also focus on expanding its Nectar loyalty offering, with the aim of delivering a further £100 million in profit contribution by March 2027.

The update comes just after the group announced last month that it would wind down its banking operations to focus on retail.

Sainsbury's said the expanded food range will be tailored to each store, but will also include the rollout of more fresh food and ready-made meals, such as the Kitchen Deli offering, as well as charcuterie and cheese boards.

William Woods, a retail analyst at Bernstein, said the strategy update was “as expected, more evolution than revolution, building on the 'food first' strategy launched in 2020 which has so far been successful in reversing market share and bringing the focus back to food”.

He added that the “commitments are a bit vague, such as providing leverage on revenue growth.”