Sainsbury's outperforms major rivals in weak UK market
Sainsbury’s recorded the smallest sales decline among Britain’s big four grocers in the latest 12-week period, showing tentative signs of improvement after nearly two years of underperformance.
Market researcher Kantar says Sainsbury’s sales fell 0.6% in the 12 weeks to Aug. 11. That compared with falls of 1.6%, 1.5% and 2.7% at industry leader Tesco, Asda and Morrisons respectively. (https://www.kantar.com/)
“While each of the big four lost market shares, Sainsbury’s will be cheered to be the strongest performer among this cohort for the first time since November 2017,” says Fraser McKevitt, Kantar’s head of retail and consumer insight.
He said that bucking the market-wide trend toward own-label products, sales of branded goods at Sainsbury’s rose by 1.5%, driven by higher levels of promotion and lower prices.
Coupe under pressure
Sainsbury boss Mike Coupe is under hard pressure to turn around the group’s fortunes after the failure of the Asda deal and three straight quarters of declining underlying sales.
However, Sainsbury’s denies in a newspaper report that it is talking to internal candidates about succession planning for Coupe, but many observers believe that Mike Coupe will leave the company soon if the share value trend do not turn sharply.
Online service and lower prices
The group is cutting prices on daily essentials while investing in stores, technology and online services to meet the challenges of a fast-changing industry, where customers are shopping more frequently, demanding more convenience, buying more online and flocking to German-owned discounters Aldi and Lidl.
Sainsbury’s will update on strategy on 25 Septemberwhen it hosts a capital markets day for investors.
The Germans are strong
Aldi and Lidl’s sales were up 6.2% and 7.7% respectively in the 12-week period, taking their combined market share to 14%.
Kantar says total British grocery sales were flat over the 12 weeks, reflecting tough comparisons with 2018’s strong summer, which was boosted by a heatwave and the men’s soccer World Cup.
Total sales had fallen 0.5% in Kantar’s July data set - the first decline since June 2016.
The memory of last year still looms large for retailers and this summer’s comparatively poor weather, combined with low levels of like-for-like price rises, have made growth hard to find for retailers.
Kantar says grocery inflation over the 12 weeks was 0.9%. Prices rose fastest in markets such as crisps, canned fish and frozen fish, while falling in canned cola, instant coffee and chilled fruit juices.
Sources: Reuters, Asda, Tesco, Sainsbury’s, Kantar.