Sainsbury’s poised to adopt franchise model

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Sainsbury's

Sainsbury’s is reportedly considering franchising its convenience stores as it struggles to secure new property, according to The Guardian.

The UK’s second-largest supermarket chain has announced that only 25 new Sainsbury’s Local stores were set to be opened this year, down nearly 50 per cent on the year before and a dramatic decline from its plan of 100 new stores per year.

Chief executive Mike Coupe said new sites were becoming increasingly hard to find.

With pressure building to boost expansion amid Tesco’s imminent takeover of Booker’s vast estate of convenience stores, including Budgens and Londis, Sainsbury’s is looking to adopt a similar franchise model.

“When we look at how we grow our business, then a franchising model has some attractions to it if we can maintain control of the brand,” Coupe said.

READ MORE: Sainsbury’s annual profits fall but sales surge from Argos acquisition

The grocer is currently testing this model in eight Euro Garages petrol forecourts across the UK.

With the shift away from big shops at big supermarkets and rivals like Morrisons reviving the Safeway convenience brand, a foothold in the convenience market is becoming increasingly important.

This news comes just a day after Sainsbury’s released its preliminary results for the year to March 11, reporting an 8.2 per cent drop down from the £548 million recorded in the previous year.

Despite a dip in its grocery arm the company’s overall sales jumped by 12.7 per cent, boosted by Argos’ contribution during the final six months, which Sainsbury’s bought when it acquired Home Retail Group for £1.4 billion last year.

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