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Sainsbury’s focus on the customer rewarded in growing sales

Sainsbury's focus on the customer rewarded in growing sales

Sainsbury’s this week said its focus on the changing way that shoppers buy was paying off as it reported growing online and offline sales.

The supermarket, a Leading retailer in IRUK Top500 research, reported group sales of £14.6bn in the 28 weeks to September 23, 16% up on the same time last year. At Sainsbury’s, online grocery sales grew by 7.2% on last time – with 15% of online orders now being placed via its grocery mobile app – while convenience sales were up by 8.2%, and like-for-like sales up by 1.6%. Argos online sales grew by 10%.

Across the group, underlying profits of £251m were 9% down on the £277m reported last time, while statutory pre-tax profits of £220m were 41% down on the £372m reported at the same time last year. The prior year figures included one-off income of £209m related to the sale of its pharmacy business and to a property gain.

Mike Coupe, chief executive of Sainsbury’s, said more customers were choosing to shop at Sainsbury’s than ever before, thanks to its focus on providing the shopping channels that reflect their changing behaviour. “We are now three years into delivering our differentiated strategy and are seeing clear results.

“We are adapting to meet customers’ changing shopping habits and, as a result, we are seeing positive momentum across the business. This half we have updated and improved 70 of our food ranges, covering around 40% of our food sales; improved our offer across 15% of our supermarket space and opened a further 73 Argos stores in Sainsbury’s, giving customers more reasons to shop at Sainsbury’s.

““We continue to focus on offering our customers great value, supported by our removal of multibuys. Customers can shop at Sainsbury’s knowing they get good value every day without having to wait for products to be on promotion.”

Here’s the supermarket group, which also owns IRUK Top500 Leading retailer Argos, said about its multichannel strategy.

Cross-channel shopping

Digital in-store has been a focus for Sainsbury’s as it looks to make supermarket shopping more convenient for its customers, and that has stepped up following its acquisition of Argos. Today it said its integration of Argos was going “at pace”, with 112 digital format Argos stores now open in Sainsbury’s supermarkets, a figure set to rise to 165 by Christmas and to 250 by March 2019. It has also opened nearly 200 digital collection points in stores, including 100 Sainsbury’s Local stores, while the Habitat click and collect service has launched in 2,300 locations.

Sainsbury’s is also rolling out a Smart Shop service to enable shoppers to scan and pay for their in-store shopping via their mobile phone, with checkout at a dedicated till. This will be in 45 stores by mid-November. The supermarket is also trialling checkout-free shopping at its London Euston store.

The digital format Argos stores and in-supermarket click and collect services are built on the foundation of its Fast Track delivery and collection services, and today Sainsbury’s said those services were its fastest growing channels, with Fast Track delivery up by 32% and Fast Track collection up by 59%. Argos online sales grew by 10% at the same time, with 56% of Argos sales now starting online.

The Customer

Sainsbury’s aims to gain a better understanding of its customers through its recently-launched Living Well Index. “The results of this,” said Coupe, “combined with our customer data, will influence some of the choices we make around how we best serve our colleagues, customers and communities in the future.”

Operations and logistics

During the half-year the supermarket expanded its one-hour Chop Chop delivery service to a potential 1.7m customers in central London. By Christmas the service will be available from 93 supermarkets.

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