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Sainsbury sets expansion
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July 21, 1999: 9:14 a.m. ET
No. 2 U.K. supermarket chain sees 10,000 new jobs; 1Q sales decline
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LONDON (CNNfn) - The U.K.'s second-largest supermarket chain, J. Sainsbury PLC, disclosed massive expansion plans for its convenience store concept over the next few years while revealing a sales slump in the first quarter.
The food retailer said it plans to create about 10,000 jobs over the next three years by opening around 200 Sainsbury's Local stores nationwide, following successful trials of three stores in the south-east of England.
The expansion plans were disclosed at the same time the group said year-to-year sales at its 400 U.K. supermarkets fell almost 2 percent in the first quarter, ended June 26. Group revenue, excluding new stores, declined 0.4 percent. The U.K. supermarket division accounts for about 75 percent of total sales.
Investors reacted to the bad news on sales and marked the shares down 1 percent in London, in a falling market.
Sainsbury has struggled to keep pace in a rapidly maturing market, after losing its leading position to rival Tesco. The imminent arrival of U.S. retailing behemoth Wal-Mart will make competition even fiercer. Wal-Mart took over the U.K.'s third- largest supermarket chain, Asda, for almost $11 billion in June.
Indeed, Sainsbury started piloting the convenience store concept, with its smaller floor space layout in urban locations, only after Tesco proved it could successfully attack the niche occupied by higher-priced "corner shops".
"The roll-out of the Local will make the Sainsbury's brand more accessible and available to everyone in the U.K.," CEO Dino Adriano said.
Over the longer term, Adriano said, a further 800 small-format stores are planned. The U.K. convenience store market is worth some 15 billion pounds.
The group is also stepping up plans to expand its banking services over the next three to four years, with a roll-out of new products over the next 12 months, with particular focus on personal loans and mortgages.
Adriano said cost-cutting measures, announced in early June, are on track to deliver savings of 160 million pounds a year by the end of 2000. 
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J. Sainsbury
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