Dowdy Sainsbury to rebuild image

TO WALK into a Sainsbury's is to be transported back to the 1970s, when brown and orange dominated interior design. The company's recent advertising campaign was fronted by John Cleese, a comedian whose career reached its height in that same era.

Yesterday Sainsbury acknowledged that a failure to move with the times was one reason why customers have been deserting its stores. Unveiling sluggish profits and a cull of 1,100 managers, Dino Adriano, the chief executive, promised radical surgery.

The supermarket chain is to be "re-branded" from top to bottom, with a new logo, new company colours, even new staff uniforms. In short, a whole new corporate identity, to be backed by a new advertising campaign that emphasises quality and value for money.

The quest for a modern image represents a belated attempt to fight back in an increasingly cut-throat market. For decades, Sainsbury basked in its position as the nation's favourite grocer. Four years ago, it was knocked off its perch by Tesco, and it has been struggling to catch up ever since.

The strategy announced by Mr Adriano includes expanding stores, shortening check-out queues and introducing new products, as well as axeing backroom jobs to put more staff on shop floors.

The new corporate colours are to be royal blue and orange - not the dowdy orange of old, but a mottled, Mediterranean hue which the company calls "living orange". They will gradually take over on shopfronts, signs, carrier bags and delivery vans. Staff uniforms will be royal blue, decorated with tiny fruits. Sainsbury suggested that staff might even wear baseball caps, although it later hastily backtracked on that.

Experts were divided yesterday about whether such measures will halt the chain's decline. Its share of the UK grocery market is now just 14.4 per cent - its lowest for more than a decade, and well behind Tesco's 19 per cent. The other two big players, Asda and Safeway, have 9.9 per cent and 8.8 per cent respectively.

Many of Sainsbury's core customers - middle-class shoppers willing to pay a premium for quality products - have been poached by Tesco, which abandoned its founding philosophy of "pile it high and sell it cheap" in order to play Sainsbury at its own game.

Michael Godliman, a director of retail analysts Verdict Research, dismissed the re-branding exercise as "gloss and packaging". The reason for Sainsbury's poor results, he said, was the way that the business was managed. "The company is a victim of its own success," he said. "It was number one for so many years that it became complacent. It became distant from its customers and its marketplace."

With Tesco now perceived as offering the quality once associated with Sainsbury together with more competitive prices, the latter now has the difficult task of tackling its nearest rival head-on.

That is the aim of the new television advertising campaign, which will be launched this Sunday. It replaces the Value To Shout About campaign starring John Cleese, which Sainsbury itself has admitted was an embarrassing flop, alienating customers and even its own staff.

That view is shared by the industry. John Tylee, associate editor of Campaign, the industry magazine, said: "Sainsbury has always been the grocer of Middle England, and Middle England didn't like this advertisement. It didn't like the Cleese character; it didn't like his hectoring style; it didn't like being lectured at."

The new campaign, comprising two advertisements, could not be more different. One features a mother and her little boy, whose eyes light up when he sees a gingerbread man pass through the check-out; the slogan is "Sainsbury - making life taste better."

Mr Tylee said: "What they have done is to step back a pace to a more gentle approach. Sainsbury had lost the plot and people didn't really understand what they stood for anymore."

In a U-turn from just a year ago, when it declared that it intended to concentrate on food, Sainsbury also plans to introduce more non-food items, such as clothes and cooking utensils.

It is in this sector that Tesco and Asda have fared particularly well, offering products ranging from mountain bikes to Calvin Klein jeans at discount prices. Yesterday Tesco announced that it is to sell cut-price motor scooters.

In recent years, it has trailed Tesco in introducing financial services, home deliveries, smaller in-town convenience stores and, most notably, loyalty cards. Sainsbury, which now has its own loyalty scheme, originally dismissed the cards as "electronic Green Shield stamps". "Sainsbury is in danger of being a follower," one analyst said yesterday. "Tesco innovates, Sainsbury follows, and that's a losing strategy."

Business, page 18

Diane Coyle, Review, page 5