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Feedback from the frontline of the retail wars

Sainsbury is reportedly planning to take on Amazon and Tesco this Christmas, with the launch of an entertainment section to its home shopping offering. Will the second best superstore in the land succeed?
By Basheera Khan, UK correspondent, ITWeb
Johannesburg, 21 Oct 2002

Halloween is a week away, and plans are under way to celebrate Guy Fawkes Day with a bang - but has it stopped the High Street retailers from trotting out the Christmas decorations already? Of course not.

And in the spirit of Christmas, Sainsbury - one of the contenders in the UK`s fiercely contested grocery wars - has announced that it has its sights on its largest rivals, Tesco and wait for it - Amazon.

Sainsbury - one of the contenders in the UK`s fiercely contested grocery wars - has announced that it has its sights on its largest rivals, Tesco and wait for it - Amazon.

Basheera Khan, UK contributor, ITWeb

Sainsbury reportedly intends to launch an add-on to its online shopping arm, specialising in the sale of entertainment products such as books, CDs, DVDs and videos - and it hopes to do this in time to capitalise on the Christmas rush.

The home shopping market in the UK is estimated to be worth about lb1.2 million, but despite its best efforts to date, Sainsbury continues to trail Tesco in the market share stakes, and has yet to break even on its home shopping service known as Sainsbury`s To You, which dented its operating profits for the year ending 31 March 2002 to the tune of lb50 million.

By contrast, Tesco has steamed ahead in its online ventures, seemingly making the right technology choices every single time, and profiting from it accordingly.

Tesco`s most recent addition to its portfolio of electronic services was announced in August, and targets tech-savvy career women and commuters in particular. The service is dubbed the Pocket Shopper, and allows people to compile a shopping list on their pocket PCs and send their order through via desktop or Internet connection.

There hasn`t been much indication as to the success of this service in particular, but as it was introduced in response to customer demand, I think the odds favour a happy ending in this case.

Back to Sainsbury, and the quest for the e-commerce silver bullet.

Based upon its track record, I have a feeling that this new endeavour will probably bob unconvincingly in the online shopping waters, making enough sales to stay afloat, but falling far short of serious competition with its acknowledged rivals.

It seems the chances for a successful launch of an online entertainment shop diminish with each remembering of the spectacular crash and burn of Nectar.com, the loyalty card scheme introduced in September, and backed by Sainsbury, Barclaycard, clothing and homeware retailer Debenhams and BP.

Thousands of users flocked to sign up to the Nectar scheme online, and as the companies in question had severely underestimated demand, the site`s servers have fallen, and, it would appear, can`t get up.

Though at the time, a spokeswoman for the company managing Nectar, Loyalty Management UK, said that Nectar would be installing additional servers to cope with demand, the site is to date still not accepting online registrations or allowing users to view their points online.

And though this could all be put down to poor planning and preparation, one does get the impression that when it comes to ventures into online services, Sainsbury seems to be jinxed. Maybe this time, they`ll to shake off the obeah and at last get it just right.

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