Sainsbury's Remarkable Market Dominance: Unparalleled Success Driven by Premium Products and Competitive Prices

Sainsbury’s has experienced its largest market share growth in more than ten years, attributed to its strategic focus on both product quality and competitive pricing.

During the 12 weeks leading up to November 26, the supermarket's premium Taste the Difference brand saw a significant increase in sales, up by 23% compared to the previous year, according to Kantar data. This contributed to an overall sales growth of 10.2% during the period, resulting in a 0.4 percentage point rise in market share to 15.6%.

Sainsbury’s was the top performer among the traditional ‘big four’ supermarkets, coming in fourth overall behind Lidl (up 14.2%), Ocado (12.1%), and Aldi (11.1%).

In contrast, Tesco saw a sales increase of 8.6% over the same period, with Asda at 2.6% and Morrisons at 3.7%.

Fraser McKevitt, Kantar’s head of retail and consumer insight, explains that Sainsbury's success is attributed to consumers trading up to premium products during the holiday season, prominently featuring its Taste the Difference range in its festive campaign. Additionally, Sainsbury's year-round focus on value ranges and its Aldi Price Match also contribute to its success. According to McKevitt, Sainsbury's strategic approach to pursue both quality and affordability simultaneously is crucial for the company, especially considering consumer perceptions about its pricing compared to mainstream rivals.

Sainsbury’s has been fiercely promoting its Aldi Price Match in an effort to compete with discount retailers. The latest half-year results show a 10.1% increase in grocery sales, which the company attributes to a £118m investment in lowering prices. Consequently, more customers are now using Sainsbury’s for their complete shopping needs, leading to increased volume and competition with supermarkets, including limited-choice competitors such as Aldi and Lidl.

Sainsbury’s seems to be going after both quality and the cheapest at the same time.

Fraser, McKevitt, Kantar

Over the past 12 weeks, Sainsbury’s Taste the Difference range has seen significant success, reflecting a larger shift towards premium own brands in supermarkets. Kantar reports that these premium lines are performing exceptionally well, with a 15.4% increase in sales compared to the previous year. Wine, chilled ready meals, and fresh beef are leading the way in this growth. Despite this, the increase in discounts has allowed brands to surpass their own-label counterparts, with sales growing by 6.5% compared to 6.4% for retailer lines, according to McKevitt.

In the latest month, spending on offers reached a new peak, hitting 28.4% - the highest level in over two years.

McKevitt explains that during the Christmas season, people tend to lean towards full-service and traditional retailers, such as Sainsbury's and Tesco, as well as premium retailers with a strong focus on food.

McKevitt believes that discount chains will be especially successful this year due to the ongoing cost of living crisis and food inflation. He predicts that Lidl and Aldi will see record sales during the holiday season, as well as strong demand for their premium ranges.

Lidl was the only other supermarket chain to match Sainsbury’s increase in market share during that period. It saw a rise of 0.4 percentage points to reach 7.8% of the total market share. Aldi also experienced a rise in market share of 0.3 percentage points, reaching 9.6%. Tesco also increased its market share to 27.5%, up from 27.2% the previous year.

The share of all other supermarkets declined compared to last year. Asda’s market share dropped 0.6 percentage points to 13.4% and Morrisons’ declined by 0.3 percentage points to 8.7%.