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Online growth in groceries and general merchandise drive Sainsbury’s first-quarter growth

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Sainsbury’s online grocery sales grew by 7.3%, and Argos general merchandise sales grew by 12%, in the first quarter of its latest financial year, as the supermarket’s same-day grocery delivery service expanded to 171 stores and use of the Argos Fast Track delivery and collection services grew fast.

The online grocery figure, coupled with a 3.6% rise in convenience store sales, helped to lift overall grocery sales by 0.5%, and total retail sales by 0.8%. Sainsbury’s said the growth came as it made it easier for customers to shop with it. Like-for-like retail sales, which strip out the effect of store openings and closures, grew by 0.2%.

The effect was also felt in general merchandise (+1.7%) and clothing (+0.8%), where  sales grew faster than the market – and faster than Sainsbury’s grocery sales. These figures include sales at Argos, where online sales grew by 12%, including via mobile, while Fast Track collection grew by 21% and Fast Track delivery by 20%.  The group says it is well placed to grow its market share. 

Mike Coupe, chief executive of J Sainsbury plc, said he was pleased with progress following investment of £150m in cutting prices in categories including fresh food. 

Transforming to meet customer need

“We are transforming our business to meet the changing needs of our customers,” he said. “We have made fundamental changes to the way we run Sainsbury’s stores. We have completed our store management restructure, which will ensure that our shops are run efficiently and in a way that puts customer service at the heart. We have also confirmed our plans to increase our colleague hourly rate of pay to an industry-leading £9.20 an hour from September and will introduce one simple, fair and consistent contract for all Sainsbury’s store colleagues. Both of these significant changes mean we are well set up for the future.”

Asda acquisition moves forward

Sainsbury’s also said it had raised £3.5bn in financing for its proposed acquisition of Asda, which Coupe said would create a dynamic new player in a competitive market, “with the scale to give customers more of what they want today and create a more resilient and adaptable business for the future.” He said the funding had been raised “on attractive terms, reflecting the confidence of the lending banks in the outlook for the proposed combined business.”

Argos-in-Sainsbury’s stores replace 84 branches of Argos

The retailer said that its integration of Argos was making progress, with 228 Argos stores now located within a branch of Sainsbury’s. To date, 84 of those stores have replaced a standalone Argos stores, and the business said that Argos stores within supermarkets had seen their sales rise by an average of 15% in the second year of trading. In the coming year, Sainsbury’s expects to add another 90 Argos branches to its supermarkets, taking its total to around 280. Alongside this, it also operates 174 supermarket collection points, including 37 in convenience stores, where shoppers can collect their Argos, DPD, eBay and Tu clothing online orders.

Sainsbury’s is a Leading retailer in IRUK Top500 research, while Argos is ranked Elite.

Tesco works with Carrefour to cut prices and widen choice

The news comes in the same week that Tesco, an Elite retailer in IRUK Top500 research, said it had struck a three-year supplier relationship partnership with French supermarket Carrefour.

At the time, Dave Lewis, Tesco group chief executive, said: “I’m delighted to be entering into a strategic alliance with Carrefour. By working together and making the most of our collective product expertise and sourcing capability, we will be able to serve our customers even better, further improving choice, quality and value.”

One motivation for the partnership is thought to be the upcoming proposed merger between Sainsbury’s and Asda.

Image courtesy of InternetRetailing Media

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