Sainsbury's Successful Drive for Value Gains Market Share from Discounters

Sainsbury’s declares it is currently at its most competitive state ever, as its emphasis on value has allowed it to gain market share from discount retailers, based on data from Nielsen.

The supermarket highlighted today in its results for the 28 weeks ending on September 16 that its focus on price matching, specifically comparing its products to those of Aldi, has resulted in increased sales. Grocery sales for this period have risen by 10.1% compared to the previous year, which the company attributes to an additional investment of £118m in reducing prices. The Aldi price match now covers over 400 products available in-store.

Sainsbury's reports that an increasing number of customers are doing their entire grocery shopping at their supermarkets, including products that were previously purchased at limited-choice competitors Aldi and Lidl. This has been a result of their determined efforts to counter the market share taken by the discounters.

Additionally, Sainsbury's price matching initiatives have resulted in customers perceiving better value consistently. CEO Simon Roberts has emphasized the continuous impact of reducing food inflation, stating that Sainsbury's is now more competitive on price than ever before. Their focus on value, innovation, and service is giving customers more incentives to choose their supermarket.

CSAT's Competitor Benchmark reveals that Sainsbury's value perception score for the 28-week period ending on September 16 is the highest it has ever been, indicating that their efforts in promoting competitive pricing and superior value are paying off. Additionally, Sainsbury's is preparing for a successful Christmas season, with their upcoming seasonal campaign ready to launch soon. Roberts expresses confidence in providing customers with everything they desire for a fantastic Christmas, emphasizing their commitment to meeting the needs of both customers and shareholders during this crucial trading period.

The retailer has reported that the growth of its Nectar Prices discount offers for members has been successful, with over 3 million new 'Nectar Digital Collectors' joining since April. Since the launch, the expansion of products available through the scheme, now at 6,000, and its availability online has resulted in savings of £450m for customers. However, Sainsbury's clothing sales have decreased by 8.4%, which they attribute to a carefully planned trading strategy in a market driven by seasonal weakness and promotions.

The company also announced that it is on track to achieve £1.3bn in cost savings by March 2024, which will help establish a more sustainable cost base and support investments in improving our customer offerings. The ongoing 'Save to Invest' initiative contributed to a 2% year-on-year increase in overall retail operating profit, reaching £485m. However, this growth was somewhat tempered by weaker seasonal sales affecting general merchandise profits. In terms of sales, the group, which includes Argos and Tu, generated £18.9m during the period, a 2.9% rise compared to the previous year's figure of £18.3m.