Ailing Sainsbury calls in the spin doctors

J Sainsbury, the supermarket group which is expected to report uninspiring first quarter trading, has called in consultants to help it find ways of improving its reputation for value but without cutting prices.

Mercer Management Consulting began work last week to evaluate the company’s value for money reputation among customers. In a memo from Sara Weller, marketing director, Mercer has been asked to examine how Sainsbury shoppers define value, and what the group can do to get the biggest shift in customer perceptions.

The firm has been charged with suggesting what Sainsbury can do, through communication for example, to “create valued alternative solutions to driving price perception” – a clear reference to options other than cutting prices. The project will also look at the potential for charging different prices in different parts of the country and in different store formats. It is expected to take four months and a marketing campaign will be launched in November using the findings.

Mercer’s project is the first indication of how Sir Peter Davis, the new chief executive, is going about his task of reviving the struggling retailer. He is expected to have little encouraging news for shareholders when he reports first quarter trading tomorrow.

Analysts are expecting the group – which has been losing its heartland of middle class shoppers to Tesco, Safeway and Asda – to report at best flat sales growth, and possibly even a further downturn. Analysts questioned what the study could show that had not been discovered in market research carried out by former managing director Kevin McCarten with Mercer more than 18 months ago.

Then, Mr McCarten discovered that Sainsbury’s was losing its reputation for value, partly due to apparently higher prices. The findings led to a campaign starring comedian John Cleese – which resulted in falling sales as consumers cherry-picked promotions. Reuters