Trouble at till saps Sainsbury

IT was billed as the big project to fight back against the relentless rise of Tesco, Britain's Number One grocer.

Sir Peter Davis was parachuted into Sainsbury nearly three years ago from the Prudential with a promise to turn round the ailing group. He declared that the company simply had to improve its IT systems, crucial to supermarkets in ordering and distributing groceries as well as speeding shoppers through the checkout.

Improving Sainsbury's IT was 'a fundamental part of our business transformation', he said. So, two years ago this month, Davis clinched a deal with Andersen Consulting - now known as Accenture - 'to improve radically Sainsbury's business efficiency by modernising its IT systems and saving costs'.

But this week, as Britain's Number Two grocer unveils its half-year figures, Davis will have to admit that the crucial project to update Sainsbury's till systems is complete in just 10% of stores and is now months behind schedule.

When the deal was struck, Sainsbury said Accenture should be able to carry out the work for £35m a year less than the supermarket

group could achieve inhouse. The cost-saving was clearly useful. But the crucial advantage was from the greater efficiency that slick new IT systems could bring.

Sainsbury promised that by spring 2002, 'point of sale systems' - the computers behind checkouts - would have been replaced. Accenture said it would 'transform customer's shopping experiences'. But it hasn't happened. The deadline came and went and the supermarket giant admits that Accenture has converted checkouts in only about 40 of its 480 stores.

Sainsbury now says that about 100 stores should have been converted by Christmas-There is no indication of when the remainder will get Accenture's IT makeover.

Sainsbury and Accenture are keen to play down reports of a rift. They refuse to comment on reports that Accenture has been forced to reduce its professional fees by 25% because of the delays. Sainsbury insists any delays in the project are down to ' rephasing' or adding new elements into the project, such as the Nectar loyalty card in September.

'The project is on track,' said a Sainsbury spokeswoman. 'There has been some rephasing of some elementsbut we are happy with the way it is going.'

However, investors are growing impatient at the speed of the modernisation project.

Some older till systems cannot process the new Nectar card, leaving frustrated customers unable to redeem points on the widely promoted loyalty card in about 50 stores.

Of more concern is the fact that in the run-up to Christmas, the crucial period for a supermarket, the majority of its stores are reliant on systems that need replacing.

Industry sources claim that inefficiencies in the old system continue to cause real problems at the checkout in unconverted stores, while teething problems with the new system are also being blamed for lengthening the queue at tills elsewhere.

Davis is widely credited with having arrested the decline in Sainsbury's fortunes. But his time with the company has not been without hiccups. Sainsbury has suffered from:

A chaotic launch of its Nectar loyalty card when computer systems collapsed, leaving thousands of customers unable to register. Technical problems allowed customers to view another person's account details.

An embarrassing moment when Jules Oliver, wife of TV chef Jamie Oliver who is paid £250,000 a year to be the face of Sainsbury, was snapped emerging from rival store Waitrose, laden with shopping.

Signing England manager Sven-Goran Eriksson to front a TV advert - just as TV presenter Ulrika Jonsson began a series of lurid newspaper revelations about their affair.