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Growth in Sainsbury’s online grocery sales slows as total sales dip

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Sainsbury’s today said that growth in its online groceries business had slowed in the short-term, as it also reported a 1.5% fall in total sales that bucks a 36-month upwards trend.

Total sales in the fourth quarter of its financial year fell by 1.5%, or 1% excluding fuel, while like-for-like sales were down by 3.8%.

Meanwhile online grocery sales growth slowed to 6%, year-on-year, which Justin King, chief executive, said reflected “a reduction in marketing while the new customer website is launched.” He added: “This roll-out is now 80% complete and is due to finish in April.” By contrast, at this time last year, online sales had grown by almost 20%, compared to the previous year.

Elsewhere, however, sales through its convenience stores business grew by more than 15%, with, for the first time, more than a million transactions taking place in one day. Convenience stores and online are now seen by supermarkets as complementary parts of a multichannel strategy focused on enabling customers to buy when they want, and how they want.

King said the supermarket expected the outlook for customers to remain “challenging” over the next year. He said: “We remain confident that our differentiated offer, supported by ‘value for values’, Nectar data and Brand Match will allow us to outperform our peers in the year ahead.”

Commenting on the results, Bryan Roberts, retail insights director, Kantar Retail, said: “Much will be made of the first like-for-like sales decline for 36 quarters. But we feel that the run was destined to come to an end in a quarter marked by profound frugality from shoppers, volume declines in many categories, huge levels of couponing and the fact that even Sainsbury’s will have lost some shopping trips to the German discounters.

“The business is still in generally good shape and its outperformance of the big four competitors, in market share terms, remains a reassuring trend. A longer-term worry is the spectre of a ‘price war’ that could disproportionately impact Sainsbury’s relatively thin margins. Another concern is Sainsbury’s hesitancy in embracing Click & Collect for grocery. It is clearly favoured by many shoppers and also tilts the economics of grocery ecommerce in a retailer’s favour.”

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