Home Business News Sainsbury’s sales slide despite discounting frenzy

Sainsbury’s sales slide despite discounting frenzy

by LLB Reporter
3rd Jul 19 10:14 am

Sainsbury’s sales have fallen, raising questions over its deep discounting strategy.

It today reported a fall of 1.2% in its total sales, excluding fuel in its quarterly trading statement. This is despite cutting prices on more than 1,000 everyday food and grocery products since February.

The results cover the 16 weeks to 29 June. Like-for-like sales, which ignore the boost that a retailer gets from opening new stores, were even worse, falling by 1.6%.

The firm said: “Retail markets remain highly competitive and promotional.”
Russ Mould, investment director at AJ Bell, said: “This is not an inspiring update as every single sales metric is pointing downwards. But is it really a surprise?

“We already know the supermarket sector is highly competitive and Sainsbury’s is stuck in the middle – being too expensive for value shoppers and not perceived as high enough quality for the premium shoppers.

“Now that a merger with Asda is no longer going to save the business, Sainsbury’s has to go it alone and find a way to survive and – most importantly – prosper.

“Unfortunately it’s hard to identify Sainsbury’s edge and how it will bounce back.

“On one hand it continues to push the non-food side of its business, helped by owning Argos. It talks about being the UK’s fifth largest clothing retailer by volume but clothing is only part of the mix and not the single factor that can save Sainsbury’s. Neither will beauty sales despite plans to roll out a larger proposition.

“On the other hand, it is cutting prices on own brand food products and it is ‘on trend’ with plant-based food which shows it is abreast of changing consumer tastes.

“There is still a sense that Sainsbury’s doesn’t really know what it wants to be. Without a unique selling point it will be hard to have clear marketing strategies, targeting the right type of people and commanding customer loyalty.

“A business lost at sea is just going to drift, either bobbing along until it reaches an unknown destination or it will sink.”

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