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Analyst says recent cost cuts leading to poor standards in Sainsbury’s stores

| International retailers

A City analyst has claimed that recent cost cutting and restructuring at Sainsbury’s has led to “poor standards” in its supermarkets with empty shelves, unmanned checkouts and general untidiness becoming a widespread problem.

According to The Telegraph, analysts at stockbroker Shore Capital issued a note to clients last week which highlighted the issue and its potential impact on the Sainsbury’s trading performance. Using photos from two stores in Merseyside to show the drop in standards, Shore Capital insisted the issues were nationwide, adding: “Shoppers are neither blind nor dumb.”

Sainsbury’s delivered cost savings of £185m in its last financial year which brought the total to £540m over three years – exceeding its original target of £500m.  The group expects to deliver further cost savings of at least £500m over the next three years to 2020/21, starting with £200m of savings in its current year.  This is expected to come from efficiencies in the business and further moves to simplify its operations and reduce costs throughout its store estate.

As part of these changes, Sainsbury’s announced back in January that it was commencing with a major management shake-up in its stores that put thousands of jobs at risk.  The move has seen several senior roles – such as deputy manager, department manager, team leader and store supervisor – axed at its larger outlets and convenience stores.

A Sainsbury’s spokesperson hit back at Shore Capital’s claims, telling The Telegraph that its availability was “industry-leading”.

They added: “With around 1,400 Sainsbury’s stores across the country, it’s always possible there may be an empty shelf in a store on occasion. But reasonable explanations, such as a late delivery for example, are more likely to explain this than reaching conclusions that ignore the facts.”

Shore Capital’s Clive Black stood by the research, saying: “We wanted to make sure we were not being selective; you can go to any supermarket on a bad day and see bad stuff. But at Sainsbury’s we are noticing gaps on shelves and noticing them get bigger. The only way we can explain it is they are paring back costs.”

Sainsbury’s sales growth has lagged its main rivals for most of this year as Tesco, Asda and Morrisons make progress with their recovery strategies.

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