Sainsbury’s has reported a rise in quarterly sales reflecting its investment in value, innovation, service and availability.
In the 16 weeks that ended 24 June 2023, the supermarket giant reported a 9.2% rise in total revenues, with like-for-like sales excluding fuel soaring by 9.8%.
Grocery
According to Sainsbury’s CEO Simon Roberts, the Leading Retailer, is committed to offering customers “the very best prices” as food inflation begins to ease, arguing that food prices are not rising as fast as they were.
As a result, the company has defended its record, revealing it has kept prices lower, thanks to a £60 million investment, on over 120 essential food items including bread, milk, butter and toilet paper, which resulted in an 11% rise in grocery sales, also driven by a return to volume growth.
“Prices on our top 100 selling products are now lower than they were in March, against a market where prices have gone up,” Roberts said.
He added that customers have also saved over £90 million since it launched Nectar Prices earlier this year, offering its loyalty members exclusive pricing. As a result, over one million new customers have signed up to digital Nectar.
According to Sainsbury’s groceries online benefitted from “improved availability, technology upgrades, operational efficiency and strengthening of value messaging”
However, CI&T chief growth officer of EMEA Rebecca Crook believes investing in technology like AI is “key to driving greater efficiencies, but it can also enhance creativity”.
She said: “At Sainsbury’s, we’ve seen more personalised communications with consumers – for example, how to make recipes at home in more cost-effective ways. Tailoring comms and offering incentives based on shoppers’ needs will help retailers boost market share even more.”
According to Delineate founder and CEO, James Turner, the move highlights the “importance of understanding consumer needs.”
He said: “Looking beyond simply doing the right thing, Sainsbury’s understands that at times like these, customer loyalty comes through delivering on consumer needs and providing them with everyday choices to effectively manage their budgets.
“As retailers and brands work to maintain their market share, competitive advantage comes from understanding these fast-changing consumer needs and real-time consumer and category insight becomes ever more important.”
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Sainsbury’s has been ranked as a Leading retailer in RXUK’s 2023 Top500 report
Sainsbury’s added: “Nectar Prices is now a key part of how we present value to customers online and this will be further enhanced later this year when we introduce personalised discounts through Your Nectar Prices to groceries online.”
To further its investment into customer value, the retailer also moved all its value brands to its Stamford Street label, offering around 200 everyday staples at low prices.
Sainsbury’s also added that over 40% of Stamford Street products are included in its biggest-ever Aldi Price Match campaign.
Roberts continued: “Our entry price range and through our biggest ever Aldi Price Match campaign. All of this is underpinned by the continued delivery of our cost-saving programmes.”
However, in the three months ended June 2023, the supermarket giant added that it has seen customers buying more groceries, measured by volume, as a response to the King’s Coronation in May.
“Customers are choosing us when they want to celebrate and we grew ahead of the market over Easter, the Coronation and the bank holidays.” Roberts said.
“Customers can see that prices at Sainsbury’s have improved and this combination of great value and some good weather in recent weeks means we have grown our food volumes and market share.”
Clothing
According to the retailer, the 3.7% drop in clothing sales was impacted by the cooler weather, with stronger sales in the later weeks of the quarter as the weather improved.
However, online clothing benefitted from the migration to the Argos web platform and the introduction of over 20 more third-party brands, including Finery London, Sosandar, Triumph and Love Luna.
The move comes as earlier this year, the company announced plans to launch its online marketplace for high-street fashion, in a bid to diversify its product offering.
As a result, it is offering flexible terms of conditions with these brands, alongside lower commission rates compared to John Lewis, which charges at least 40%.
The move is headed up by former John Lewis managing director Paula Nickolds, who leads Sainsbury’s non-food business, alongside Christine Kasoulis, the supermarket giant’s director of clothing, home and furniture.
Argos
In the period, Argos saw a 5.1% increase in sales, as it continued to gain market share.
According to the retailer, it saw continued growth thanks to “strong availability” in mobiles, tablets and gaming consoles, alongside ongoing demand for energy-saving products, resulting in the retailer being “well placed for customers in Argos’s 50th birthday year.”
However, sales growth was diluted by 1.1% due to the closure of all 34 Argos stores in the Republic of Ireland, resulting in over 580 jobs being affected.
The closures follow the company reporting an operating loss of €12.6 million in the year to 5 March 202, representing a sales decrease of over 21% compared to the same period last year.
Looking ahead
Crook added: ““This is still a hugely challenging period for retailers and Sainsbury’s, amongst others, will need to think carefully about how to keep customers coming back.”
However, the supermarket giant claimed that trading was in line with expectations and expects to deliver an underlying profit before tax of between £640 million and £700 million.
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