Sainsbury’s losing out to rivals
Supermarket giant Sainsbury’s has posted another drop in sales as competition in the sector hots up.
The retailer saw like-for-like sales fall 1.1 per cent in the second quarter and blamed a weak food sector for the drop.
Total sales fell 0.4 per cent, excluding petrol.
It reported that like-for-like sales at Argos, which it bought as part of a £1.4bn takeover of Hone Retail Group, rose 2.3 per cent in the second quarter while total sales climbed three per cent.
Mike Coupe, Sainsbury’s chief executive, said he was confident the strategy would help it to “outperform our major peers”.
He added: “We continue to make progress against our strategy and, while like-for-like sales were down 1.1 per cent, driven by food price deflation, we delivered like-for-like transaction growth across all channels and total volume growth. This shows that customers are consistently choosing Sainsbury’s for the choice, quality, value and customer service we offer.
“We expect the market to remain competitive and the effect of the devaluation of sterling remains unclear. However, Sainsbury’s is well positioned to navigate the changing marketplace and we are confident that our strategy will enable us to continue to outperform our major peers.”
WHAT THE EXPERTS SAY:
Phil Dorrell, Partner, Retail Remedy retail consultants, said:
“Sainsburys is facing a resurgent Tesco and Morrisons. In the next 12 months Asda will also start to regain its footing, and Aldi are in fighting talk, standing by their pledge to be the lowest priced grocer. Quite simply, Sainsburys footfall is falling short.
“There is an opportunity for Sainsburys to place product at the core of its marketing, not a cuddly cat, not a bar of chocolate, a family meal that reinforces the brand and quality messages, but also gives us a really clear reason why we should go to Sainsburys.
“The Little Twists campaign says buy nectarines for your pizza. It doesn’t say buy them in Sainsburys.
“There is another opportunity hanging on the clothing rails. The addition of a TU Premium range shows commitment, but the success of a range does not begin and end with good design and buying. In store execution is lacking andhas been for some time.
“Argos has been a distraction, of course a £1.4bn purchase will be distracting, and the pressure to ensure that it delivers a return will be immense. However, at what cost to the core business?
“Our advice, keep it simple Sainsburys. Don’t keep adding little twists. If the main ingredients aren’t right, no amount of little twists will help.”