SAINSBURY’S became the latest major retailer to announce store closures and job losses with yesterday’s announcement that about 3,500 positions are expected to go within its Argos chain as well as on its fresh meat, fish and delicatessen counters in its supermarkets.

The news came as the UK’s second-largest supermarket posted a pre-tax loss of £137 million for the 28 weeks up to September 19 after being hit by £438m in one-off costs related to Argos store closures coupled with strategic and market changes. Underlying pre-tax profits surged 27 per cent to £301m although there were £290m of extra costs related to Covid-19, mostly offset by business rates relief of £230m.

Sainsbury’s said jobs will go with the imminent closure of 120 Argos stores, part of a strategy to shut 420 standalone Argos branches over the next three-and-a-half years, reducing the catalogue retailer’s store estate to 100 by March 2024. Additional Argos outlets will be created within Sainsbury’s superstores with more Argos collection points being rolled out in its supermarket and convenience outlets.

The grocer reported a 7.1 per cent increase in total retail sales, excluding fuel, with like-for-like sales up 6.9%, grocery sales up 8.2% and general merchandise sales up 7.4%. Digital sales at the group soared 117% to £5.8 billion to make up almost 40% of total revenues, with online grocery sales jumping 102%.

Simon Roberts, who succeeded Mike Coupe as chief executive of J Sainsbury in January and said he will waive any bonus entitlement for this financial year, said that Covid-19 had “accelerated a number of shifts in our industry” and pledged to put “food back at the heart of Sainsbury’s”. Pointing to investments over recent years in digital and technology, he said that these had laid the foundations for the firm to “flex and adapt quickly” as customers shop differently.

“While we are working hard to help feed the nation through the pandemic, we have also spent time thinking about how we deliver for our customers and our shareholders over the longer term,” said Mr Roberts. “We will put food back at the heart of Sainsbury’s. We are already working to make this happen – we have lowered prices on over 1,500 everyday grocery products and will do more of this, focusing on staple products that customers buy every day.

“We will focus on accelerating product innovation and will bring new and exclusive products to our customers much more often. To support our ambition in food, we are accelerating our ambition to structurally reduce our cost base right across the business so we can invest faster back into our core food offer.”

Sainsbury’s, which has about 100 supermarkets in Scotland, said it was shutting meat, fish and deli counters, based on reduced customer demand, making stores simpler to run and reduce food waste. It also confirmed plans to increase the rate of new convenience store and neighbourhood hub openings over the next three years.

Pete Cheema, chief executive at the Scottish Grocers’ Federation (SGF), said it wasn't surprising that Sainsbury's had plans to invest in its convenience store estate. Convenience and local retailers, he pointed out, were already investing in areas including fresh and chilled produce, and “food to go” lines such as breakfast, lunch and dinner food solutions. Sainsbury’s and others moving away from serve-over deli, meat and fish counters presented more opportunities for them, he added.

Mr Cheema pointed to the recent Scottish Local Shop Report, produced by the SGF and Association of Convenience Stores, which revealed that convenience store operators have invested £62m in their businesses in 2020, including in-store chillers for fresh produce. “The Scottish Local Shop Report gives us the hard numbers we need to show clearly how important the convenience sector is to the national economy, the local economy and to our communities,” he said.