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Sainsbury’s says work to reshape its business around its customers’ needs is paying off

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Sainsbury’s says its work to transform its business around its customers’ needs is paying off. The supermarket, ranked Leading in IRUK Top500 research, said that it has won new customers for its groceries and general merchandise sales as it makes delivery and collection options more convenient, while also enabling customers to achieve more on their supermarket trips.

Online grocery sales grew by nearly 7% in the first half of its financial year. The retailer now offers same-day grocery delivery from 172 stores which, it says, cover nearly 60% of UK postcodes. Customers ordering by midday can be collected from a store from 4pm or be delivered from 6pm.

General merchandise sales, including via Argos, grew by 1.5%. Sales via the Argos Fast Track delivery service grew by 18%, while sales through Fast Track click and collect were 21% ahead. Sainsbury’s says Argos is the only retailer to offer same-day delivery across more than 90% of UK postcodes as well as immediate in-store collection. Clothing sales fell by 1% as Sainsbury’s changed its promotions to align them more closely with seasonal events. However, online clothing sales were up by 52% after the Tu brand started to be sold via the Argos website. 

The retailer has also reworked the supermarket experience, adding branches of Argos as well as complementary retailers such as Specsavers and Clarks. There are now 251 Argos branches in Sainsbury’s supermarkets, a number set to reach 280 by the end of the financial year. Of those, stores that have now been trading for more than three years are now turning over 45% more than they did in the first year. Additionally, shoppers can now collect online orders despatched by businesses including Argos, Tu, eBay and DPD from click and collect points in stores. In all there are 233 collection points in stores, of which 108 are in convenience stores, where shoppers can collect their Argos and Tu packages. 

Shoppers can use SmartShop self-scan shopping in 68 supermarkets, and Sainsbury’s says it was the first European grocer retailers to enable in-store payment using a smartphone. As a result of such measures, it said, “trading intensity” has grown. 

The update came as Sainsbury’s said group sales, excluding VAT but including fuel, came in at £15.1bn in the six months to September 22, 3.4% up from £14.6bn last time. At the top line, underlying pre-tax profits of £302m were 20.3% ahead of last time, but £170m in costs related to integration with Argos, its proposed Asda merger, and property losses, meant that bottom-line pre-tax profits of £132m were 40% down from £220m last time. Sainsbury’s said £51m in top-line profit growth was driven by Argos synergies, delivered ahead of schedule. 

Mike Coupe, chief executive at Sainsbury’s, said: “The market remains very competitive and we are transforming our business to meet rapidly changing customer needs. We have fundamentally changed how our 135,000 Sainsbury’s store managers and colleagues work and I would like to thank them for their ongoing hard work through this period. 

“We have delivered a solid first half performance and profit has increased because we have delivered significant Argos synergies ahead of schedule. Sales of food and general merchandise were boosted by the hot summer, but general merchandise margins remain under pressure.

“Our strategy of offering customers a distinctive range of high quality and great value food has driven like-for-like sales growth at Sainsbury’s. Where we have invested in lower prices, volumes and transactions have increased.

“Our proposed combination with Asda will create a dynamic new player in UK retail, with the ability to further lower prices and to reduce the cost of living for millions of UK households. The Competition and Markets Authority is conducting its in-depth Phase Two review into the proposed combination and we continue to engage constructively with the CMA and Panel.”

Image courtesy of Sainsbury’s

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