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Sainsbury’s grows online and in convenience, even as overall sales fall

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Sainsbury’s showed its multichannel approach to shopping, enabling customers to shop however, wherever and whenever they want to, has helped its online and convenience businesses to grow. But the supermarket was not immune from a competitive environment that has seen its competitors post overall falls in sales over in recent weeks. At Sainsbury’s, like-for-like sales were down by 1.1%, although overall sales lifted by 1%.

The BRC warned yesterday that supermarket price wars would hit retailing as a whole, and food sales in particular.

Justin King, outgoing chief executive, said customers continued to hold back on spending despite price cuts. “Lower food price inflation and reduced fuel prices are a welcome respite to customers’ finances but they continue to spend cautiously, leading to industry growth in the quarter being the slowest in a decade,” he said.

Today Sainsbury’s said sales from its convenience stores and online services had together almost doubled over the last five years to the point where they account for 15% of total sales.

In the first quarter of its financial year, the supermarket today reported online grocery sales up by 10%, compared to the same time last year. That follows the roll-out of its new web and mobile platforms, completed in April. At the same time the supermarket opened its 200th convenience store in London in a quarter that saw convenience sales up by 18%.

Both sales channels helped to lift total retail sales for the 12 weeks to June 7 by 1%, excluding fuel. But like-for-like sales were down by 1.1%, again excluding fuel.

Bryan Roberts, director of retail insights at Kantar Retail, said the figures suggested Sainsbury’s “incredible run of form” was over. “With Asda now ruling the roost among the Big Four and Aldi, Lidl, Waitrose and M&S outflanking their larger mainstream competitors, the market is only going to get more difficult,” he said. “Although we are heartened by the encouraging, if belated, move into online fashion and click & collect grocery, Mike Coupe [who will replace Justin King as chief executive in July] faces an uphill struggle in reversing the declining trend in like-for-likes. With Tesco desperately seeking recovery and the Co-op poised to raise its game, Sainsbury’s could face further pressure in the coming months and quarters. If Sainsbury’s has any decent strategic aces up its sleeve, now might be the time to play them.”

Our view: It’s no surprise that Sainsbury’s is finding that multichannel works for it and its customers. That chimes with a general move by British supermarkets in recent years to develop multichannel choices that include expanding convenience chains, close to where customers live, work and do top-up shops, alongside online grocery and non-food websites as well as large supermarkets.

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