While other supermarket operators have curtailed their plans to build huge numbers of new superstores, Sainsbury, the market leader, has so far stood aloof, determined to open an average of 20 stores a year over the next three years.
At his annual meeting yesterday David Sainsbury conceded that the new guidance on planning regulations - introduced by Mr Gummer in an effort to shift the present balance in favour of out-of-town retail developments back towards in-town projects - would make it hard to meet this self-imposed target.
To smaller, price-conscious competitors such as Archie Norman of Asda, the Sainsbury strategy has long looked like lunacy. Investing vast quantities of money to take market share away from your existing stores at a time when margins are in long- term decline makes no kind of commercial sense, he argues.
If British Steel built a new plant in Scotland, its chairman would be taken away by the men in white coats and deservedly so. The analogy is exaggerated, but no less valid for that.
Mr Sainsbury is putting a brave face on things, arguing that new investment has been delayed rather than cancelled. Mr Gummer's guidance to planning authorities has merely caused probems of interpretation and nothing more fundamental.
Mr Gummer's initiative might none the less provide a convenient excuse for a more fundamental reappraisal. An increase of just 0.5 per cent in like-for-like sales volume in the first 12 weeks of this year says more about overcapacity in food retailing than about consumer spending.
To keep profits moving ahead at all in the face of sluggish volume and falling prices, Sainsbury is having to resort to the time-honoured practice of cost-cutting. Job cuts and investment in new technology should be yielding savings of pounds 65m a year by next March.
The price war in food retailing is not going to go away. The proliferation of choice available to the consumer will ensure it. Thanks to Mr Gummer, J Sainsbury may have to make the most of what it has got.Reuse content