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Sainsbury’s steps up IT investment to support online growth

Sainsbury’s steps up IT investment to support online growth

Online grocery orders now exceed 165,000 a week

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Sainsbury’s has announced it will be investing in its IT systems to support and develop its growing online platforms.

The supermarket chain revealed that its online grocery division has an annual turnover of around £800 million, from more than 165,000 orders a week. In addition, its general merchandise website now offers more than 6,000 branded and own-brand products.

“[This places] us second in the market [behind Tesco and makes] us the fastest-growing major online grocery business in the UK,” Sainsbury’s said in its preliminary results for the year to 17 March 2012.

The company spent £163 million on IT and its supply chain in 2012, up from £121 million in 2011.

Although its overall capital spend is set to fall next year (from £1.2 billion in 2011/12 to £1 billion in 2012/13), the decrease will be mainly in the cost of store extensions. A pie chart in the company’s results shows that the amount allocated for IT investment will nearly double last year’s amount, to make up around a fifth of total capital spend in 2012/13.

Sainsbury’s said that it had also made cost savings from IT.

It achieved more than £100 million of operational cost savings last year, which came from initiatives including cutting costs of IT procurement, the deployment of self checkout tills and increased network efficiencies.

“[The savings are] a result of improved productivity, ongoing procurement savings and simplification of in-store processes. For example, in logistics, we continue to make improvements in vehicle efficiency, load and fuel efficiency and route optimisation.

“In addition, we have recently introduced new warehouse technology, which enables colleagues to work more efficiently, help improve product availability and reduce waste,” the company said in its results.

Sainsbury’s reported a fall in pre-tax profit of 3.4 percent to £799 million, down from £827 million in 2010/11, however, its underlying pre-tax profit was up 7.1 percent from the previous year (£655 million) to £712 million.

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