How Sainsbury Beat the Blues with Tech

Technology has helped Sainsbury's (SBRY.L) keep the tills ringing throughout the recession.

The supermarket giant is busy revamping its tech, from fitting stores with self-scanning technology to replacing its warehouse and supply systems.

It seems to be feeling the benefit: on Wednesday Sainsbury's announced total sales in the first half of the year, excluding fuel, were up 7.1 per cent over the corresponding period in 2008 and its weekly transactions now exceed 18.5 million, up some four per cent year-on-year.

One of the ways the retailer has helped bolster its bottom line is by implementing a new system called real time supply, which ensures its stores are stocked with products.

Information on store sales is fed straight from the till into the real time supply system, allowing Sainsbury's warehouse staff to see exactly which stores need to be resupplied with which products.

As a result, trading director Mike Coupe told that stock availability has come on significantly. "We have made huge progress over the last five years," he said at a roundtable event organised by supply chain standards organisation GS1.

Availability should also be improved by the replacement of its "very old" partly paper-based warehouse management system called Disco with a new system provided by RedPrairie.

Coupe said the new system, which is currently being rolled out, will give the chain a "much more accurate measurement of where our stock is" than it currently has and allow Sainsbury's to better match products to stores where they are needed.

In-store, Sainsbury's is also in the middle of rolling out extra systems to allow shoppers to scan their own shopping. Self-scan systems will be fitted at 17 existing and 30 new shops this year.

"The big push is for self-scanning, we would expect 25 to 40 per cent of transactions to be self-scan at retrofitted stores," Coupe said.

Tech is also helping Sainsbury's create personalised discount vouchers for shoppers that offer discounts on products they regularly buy.

The system uses data from its Nectar customer loyalty scheme to determine a customer's tastes and prints off customised vouchers at the checkout, Sainsbury's CEO Justin King revealed in a conference call with investors on Wednesday.

Colour printers that issue coupons at the till have been rolled out to 100 stores, and Sainsbury's aims to have 13,000 checkouts in 535 supermarkets covered by the end of the month.

Responsibility for running the chain's tech recently passed to former CSC exec Rob Fraser, who took over as Sainsbury's IT director from Angela Morrison at the start of September.

Coupe said Sainsbury's would continue its drive to increase the efficiencies of its IT operations under Fraser.

This savings drive began when Sainsbury's ditched a 10-year IT outsourcing contract with Accenture in 2005, half way through the deal, and brought the services back in-house.

At the time the supermarket said its aim was to cut £35m per year from its £200m annual IT bill.

Coupe said: "The key thing for us was to bring in-house the people and the processes to run an efficient IT operation.

"When we in-sourced from Accenture we delivered a significant level of savings and we are still looking at implementing further savings through operational efficiencies.

"We have now got the right level of control and the right level of management process for our business."

The supermarket still outsources areas such as software development and has deals in place with IBM (IBM), Infosys (INFY) and Oracle (ORCL).

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