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Barely a week goes by in which Sainsbury’s is out of the news. This

week’s story - that the supermarket giant has appointed a new direct

marketing agency, Barraclough Hall Woolston Gray, to its home shopping

service - represents the latest salvo in the supermarket wars.

There is no doubt that Tesco is the early winner in the internet

shopping battle, with Tesco Direct covering 50 per cent of the

population (with a plan to rise to 90 per cent by the end of the year)

and, in April, the news that it would be floated off as a separate

business. Iceland, too, has captured a niche area of the market with its

free online service. Tesco proclaims profit on Tesco Direct but

observers are cynical. Somerfield axed its own service because it does

not have the resources to be able to absorb a loss.

Sir Peter Davis, the new chief executive of Sainsbury’s, is well placed

to drive Sainsbury’s online services forward. His credentials include

being the brain behind one of the most successful e-commerce ventures

yet: the Prudential’s Egg products.

And he has some high-profile fixing to do, with every move scrutinised

amid tumbling share prices and accusations of perpetuating ’rip-off

Britain’.

Sainsbury’s To You launched in May, in what looked a lot like an effort

to usher its sickly predecessor Sainsbury’s Orderline into a

cupboard.

Orderline, which used the telephone and fax rather than the internet,

launched in 1996 in a trial store in Watford. But after rolling out to

27 stores, it was pulled from 19 of those last May, continuing

operations from certain London stores.

As the head of e-commerce at Sainsbury’s, Nick Adderley admits: ’It

wasn’t working that well. The economics were really bad, and the process

of picking (finding the goods to complete a customer’s order) wasn’t

working as well as it could have done.’ Rather than providing limited

coverage for large areas, the decision was made to offer a telephone and

internet service in London, and plans began for a huge picking centre in

Park Royal, which opened last week.

Adderley argues that Sainsbury’s To You’s point of difference is the

emphasis on quality and fresh goods, reinforcing Sir Peter’s declared

intention to reclaim this heartland after an unsuccessful foray into a

price-led strategy. Indeed, Chris Barraclough, the chairman of BHWG,

tested out the service while preparing his agency’s pitch, and praises

the accuracy and speed with which his order was processed, right down to

the single chipolata requested from the deli counter.

But press coverage has exposed the inconvenience and shortcomings of

online shopping, both in speed of access (which is down to the

individual’s computer) and accuracy of order. Adderley wonders if

perhaps people’s standards aren’t a bit high: ’When you get home from

the supermarket, you realise that you have forgotten something or made a

mistake. Or you go in fancying roast chicken, but you can’t find the

size bird you want, so you choose lamb. Trying to replicate those

decisions in a system is very hard, and our pickers are not

perfect.’

The job facing M&C Saatchi, Sainsbury’s To You’s advertising agency, and

BHWG is to create demand, not only among Sainsbury’s customers but in

people hitherto ambivalent towards online grocery shopping. The agencies

will work together on targeted, local campaigns in the key postcode

areas for the new picking centre. Local press, posters, direct mail and

doordrops will combine Sainsbury’s quality message with the promotion of

ideas such as an analysis of your shopping habits in the form of a

’frequently bought’ list created using Reward Card data.

Barraclough agrees that the difficulties lie not so much in the service

itself, but overcoming negative perceptions about online shopping. ’One

of the most important things we have to do is get people to use

Sainsbury’s online shopping service again,’ he says. ’When people have

tried it, they’re very impressed, but they all have concerns about

whether Sainsbury’s delivers the right stuff and whether it will be

fresh. They need reassuring.’

He continues: ’There is also not as much online shopping going on as you

might believe. You see a lot of dotcom sites which have people

registering, but not actually going through and buying. Nobody has quite

made the marketplace accept internet buying as a natural thing to do,

which we want to do.’

As well as the marketing campaign, other devices are expected to be used

to boost confidence and, therefore, usage. Different people’s

reservations will be addressed in different ways - from incentives to

targeted messages and a member-get-member scheme. ’Word of mouth will be

one of our biggest weapons,’ Adderley says .

The intention is to persuade people to begin by shopping for the heavy,

bulky items that weigh them down in their weekly shop, while still

picking fresh (and impulse) items themselves. This, Barraclough hopes,

will lead to customers ordering more and more of their weekly shop

online.

’The great thing about this,’ he says, ’is that it’s a return to

old-fashioned service. The grocer always used to deliver to his

customers, and Sainsbury’s is all about those old service values.’

THE STORES TO YOUR DOOR

SERVICE           LAUNCHED   COVERAGE                 AGENCY

Sainsbury’s

 Orderline        1996       27 stores at launch,

                             falling to eight         Brann

Tesco Direct      1998       200 stores, national

                             by end of 2000           ehsrealtime

Waitrose@Work     1998       37 companies signed up,

                             60,000 people            Bank Hoggins/FCB

                             planned by end of

                             2000

Iceland.co.uk     1998       All 760 stores           HHCL & Partners,

                                                      Judith Donovan

                                                      Associates

Asda @t home      1999       M25 area

Sainsbury’s       2000       M25 area by mid-

To You                       October, 60 per cent

                             of UK population         Barraclough Hall

                             by mid-2001              Woolston Gray,

                                                      M&C Saatchi