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Sainsbury’s digital business remains twice its pre-pandemic size as supermarket moves into second place in ecommerce grocery market

Image courtesy of Sainsbury's

Sainsbury’s digital business continues to be twice as large as it was before the shift online seen during the Covid-19 pandemic. The supermarket says it is now the second largest online grocery retailer, according to Nielsen figures. In the first half of its financial year, 17% of its grocery sales took place online, up from 15% at the same time last year and 8% two years ago. Digital sales remained at the same level as last year. 

Sainsbury’s today reported sales of £15.7bn in the 28 weeks to September 18 2021. That’s 5.3% ahead of the same time last year, and 4.2% ahead of the same period in pre-pandemic 2019. Within that, retail sales of £14.9bn were 0.2% ahead of last time, and 7.3% up on two years ago. At the bottom line, digital sales stayed the same as last year, at £5.8bn – and more than double (+108%) the £2.7bn in sales made online two years earlier. Grocery sales were 0.8% up on the same time last year, and clothing sales were 33.6% ahead of last year, but general merchandise sales fell by 5.8%, across Argos (-7.3%) and Sainsbury’s (+2.4%).

At the bottom line it reported a pre-tax profit of £541m, up from a pre-tax loss of £137m a year ago, and well ahead of the pre-tax profit of £9m reported two years ago. It expects to report underlying pre-tax profit of at least £660m in the full year to March 2022. 

Sainsbury’s chief executive Simon Roberts says the retailer is making good progress with a strategy to focus on food. And he says: “Whilst customers are returning to many pre-pandemic shopping habits, online sales have remained very strong and we continue to grow market share. At the same time, our plan to transform Argos is on track, delivering significantly improved profitability.”

Roberts also says the retailers has planned ahead in order to be well stocked at Christmas. 

Roberts says: “Our industry faces labour and supply chain challenges. However our scale, advanced cost saving programme, logistics operations and strong supplier relationships put us in a good position as we head into Christmas. I would like to thank all my colleagues and all our suppliers for their hard work, commitment and dedication in the weeks ahead to ensure we deliver the best possible Christmas for our customers.” 

Multichannel strategy 

Online grocery demand at Sainsbury’s has fallen from last year’s peak as shoppers return to buy in-store, but the retailer says it is now the second largest online grocery retailer, with 17% of Sainsbury’s grocery sales taking place online. That’s up from 15% a year ago and 8% two years ago. 

Investment in online has boosted both picking rates and basket sizes, while it has also relaunched same day click and collect and home delivery. Demand for same-day – or ‘on demand’ – delivery has increased, with an average of 70,000 orders a week being sent out from about 440 shops in as little as half an hour, via Sainsbury’s own Chop Cop service, as well as via Deliveroo and Uber Eats. 

Meanwhile, online sales at Tu clothing are 70% up on a two-year basis. 

Argos strategy update

During the first half of the year, the retailer closed 36 standalone Argos stores, opening 37 in branches of Sainsbury’s. The retailer has done this as part of its strategy to lower costs by £105m. Sainsbury’s has also opened a second Argos local fulfilment centre, in Leeds.

This is part of a previously outlined plan, and Sainsbury’s said today that it expects to have up to 460 Argos stores within branches of Sainsbury’s, as well as up to 500 supermarket collection points. About 100 standalone branches of Argos will remain. Argos will be supplied by a network of 32 local fulfilment centres that will deliver both to its stores and collection points and to customers’ homes. At the end of the half-year, Argos had 738 stores, including 373 stores within branches of Sainsbury’s, and 280 collection points. Sainsbury’s had 1,409 shops.

That comes as Sainsbury’s integrates Argos and Habitat logistics and supply chains with its own in a move to reduce costs by as much as £300m. One distribution centre has closed in the first half of the year, and a second will close by next spring. 

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

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