14 MCV 16/07/10 CONFERENCE REPORT The Sainsbury’s master plan
At this year’s Entertainment Conference, Sainsbury’s detailed how it will make its entertainment offering bigger, better and bolder. James Batchelor looks at how new store formats and digital distribution will help grow its market share…
SAINSBURY’S entertainment team is on the march.
That was the message conveyed during the supermarket’s 2010 Entertainment Conference, where publishers and suppliers of all forms of media – books, films, music and, of course, video games – found out how they can share in Sainsbury’s growth. And the grocer has certainly done well for itself in the last year. Sales are up by 5.1 per cent, profit by 17.5 per cent and the
entertainment category alone has shown 23 per cent growth.
In fact, Sainsbury
announced that 2009 was its fifth consecutive year of like-for-like growth. Which makes it less
45,000 to 50,000 sq ft to such products – the same amount of space that will be given to the category in the firm’s newly-announced 100,000 sq ft store. “The core output of these new stores is we’ve got the opportunity to do something different, particularly for format holders,” says Crampton. “Whether you’re Sony, Microsoft or Nintendo, there’s a great opportunity to showcase your brand, your product in a completely different way.”
surprising that the firm was able to achieve high market share of sales for the likes of Call of Duty: Modern Warfare 2 (18 per cent) and Just Dance (15 per cent). “We’ve had a fantastic year in terms of growth,” says head of entertainment Richard Crampton.
“ A NEW FORMAT
First and foremost, Sainsbury’s will dramatically increase the amount of space dedicated to entertainment. The firm is investing £1.3 billion in building additional space and the bulk of that – more than 40 per cent, equating to over £500 million – will be going to non-food. As part of this, at least 20 new stores will be opened over the next 12 months with a full non-food offering. Sainsbury’s will also be opening three ‘new format’ stores, with a focus on non-food and entertainment. These will be open by Christmas and will dedicate
“A couple of years ago, I’m not sure we’d have reached double-digit market share on big releases. But now we’ve woken up to entertainment. Our stores love it because it drives an enormous amount of sales and footfall for them.” Over the course of the conference, Sainsbury’s played up to its chosen theme: ‘Bigger, Better, Bolder’. Having seen key successes in 2009 in all areas of entertainment, the retailer is set to up the ante in 2010.
We’ve had a fantastic year in terms of growth because corporately we’ve woken up to entertainment.
Richard Cramption, Sainsbury’s
In its established stores, Sainsbury’s will be creating 40,000 checkout bays, 40,000 seasonal bays and 1,000 metal shipping units – all of which will position entertainment products as either major new releases or impulse purchases. Video games in particular will be receiving five per cent more space in stores across the nation before Christmas, with a further 12 per cent space to be made available over the next 18 months. Sainsbury’s even plans to reorganise the layout of its games sections, with a dedicated bay for hardware and more visible ads for promotions. To justify this heavyweight investment, the onus is on Sainsbury’s entertainment division to build on last year’s success – but it’s a challenge the team feels more than confident about. “Entertainment’s growth is well ahead of the rest of Sainsbury’s business,” says head of non-food marketing Rebecca Singleton. “There’s a real opportunity for us to grow this category further and we are heavily committed to doing so. “We’re taking key market share on some of the major titles and we’re keen to do more. We excelled with Call of Duty, Avatar and Harry Potter, so customers now perceive us as a great place to go for entertainment.” Games is one of the biggest contributors to this triumph, with its own team reporting 60.9 per cent growth for 2009, a 48 per cent per cent leap in
market share, and a whopping 67 per cent more customers.
Consoles in particular have performed well, with sales up by 82 per cent for the last year.
In fact, hardware has proven to be one of the games team’s more important successes of 2009. Of all the promotions Sainsbury’s has run (see ‘Games: The Key Drivers’), it’s console sales that have been instrumental in building the grocer’s number of games customers.
”
“Driving hardware is key,” says games manager Gurdeep Hunjan. “Data gathered from our Nectar Card system showed us that 71 per cent of customers were new to the games category when we ran our Wii promotion nine months ago.”
“26 per cent of those customers returned within two weeks to buy games, and 65 per cent returned within six months and bought anything from between three and ten games. This is exactly why driving hardware is so important to us and really demonstrates the step changes that we’ve made in the games category.”
THE HARD SELL The launch of Call Of Duty: Modern Warfare 2 was a major footfall driver, with queues forming outside several Sainsbury’s outlets on the day – something the games team claims hasn’t happened since the rationing during World War II.
Hunjan attributes this to the hard work Sainsbury’s put into advertising the game’s release, with TV, print and POS ads dedicated to the specialist- baiting £26 price point. It’s a level of games marketing that has been rare in the grocer sector in the past, but one that helped the firm win over another 100,000 new customers. “Naturally, this creates an even bigger opportunity to sell games to people, and I stress the word ‘sell’ because we still have to work really hard to sell games to them,” he says.
“One the biggest things we’ve learned is that we have to make our customers aware of the products before they even come into stores. To
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maximise this footfall, we need help from publishers in terms of marketing and advertising.” The success of Call Of Duty, the Wii and more has left the games team certainly feeling confident, and they’ve been granted access to more resources from the rest of the Sainsbury’s business than ever before. “We’re in a really good place on games because corporately we’ve seen new levels of support,” says Hunjan. “But we can take this further. For the first time ever, the games team are able to propose anything they want. We’ve got access to more space, more TV events, more press, more POS events, and we need publishers’ help to really take advantage of this.”
THAT’S ENTERTAINMENT Sainsbury’s is also starting to think out of the box when it comes to major entertainment releases. Modern Warfare 2’s launch saw several staff members posing as soldiers, while others dressed as Hogwarts students for the latest Harry Potter film – and even Na’vi warriors for the release of James Cameron’s Avatar.
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