Sainsbury's CEO Simon Roberts has praised the impact of the supermarket's 'Food First' strategy, which he claims has left Sainsbury's with the 'strongest value position' it's ever had against its competitors, despite the challenges presented by the cost of living crisis.
The grocery sales grew 10.1% during the first half of the year to September 16, pushing retail operating profit up to 2% to £485m, and helped Sainsbury's win market share from both traditional big four competitors and discounters Aldi and Lidl.
Roberts highlighted efforts such as the expansion of Aldi Price Match to more than 400 products and the relaunch of its lowest-tier own-labels under the single Stamford Street banner.
“We promised to invest significantly in value, innovation and service, and as that builds, what we’re seeing is we’re gaining market share,” Roberts said. “In the first half, we’ve grown both grocery volumes and volume market share. We’re selling more food to more customers and with bigger trolleys and baskets.”
Sainsbury's has made significant changes to enhance its value proposition and boost customer loyalty. The supermarket expanded its Aldi Price Match to over 400 products and revamped its lowest-tier own-labels under the single Stamford Street banner.
The Nectar Prices scheme, a competitor to Tesco's Clubcard Prices, was rolled out to cover 6,000 Sainsbury's products, providing significant savings for customers.
Additionally, Sainsbury's has invested in innovation, launching nearly 300 new products ahead of Christmas, including over 170 Premium Taste The Difference items, attracting shoppers looking for premium-quality options.
Sainsbury's has noted a rise in shopper visits on Saturday afternoons as consumers opt for 'big nights in' during the ongoing cost of living crisis. In response to this trend, the supermarket has shifted its food innovation focus towards more premium product lines to meet the demand for high-quality offerings for at-home dining experiences.
Roberts said that a decline in grocery sales between the first and second quarter was a reflection of inflation coming down, rather than a fall in basket size. “This is a story of growing food volume,” he added.
Sainsbury’s is set to host an update on 7 February 2024, during which Roberts will outline the next stage of his strategy.
“We’re in really strong shape operationally, and really ready to give our customers outstanding service,” Roberts said. “We think we’ve got the strongest value position we’ve ever had against our competitors.”
Simon Roberts dismissed findings from a recent Which? report suggesting the supermarket was more expensive than high-end Waitrose without a loyalty card. Roberts cited data from Nielsen and Kantar, which consistently show that Sainsbury's prices are rising more slowly than the market average. He also pointed out that Sainsbury's had improved its price performance when loyalty schemes were taken into account in The Grocer 33.
“Customers are voting with their feet, they’re coming to Sainsbury’s and we’re winning share,” Roberts said.
Sainsbury’s has started to see the rate of food inflation fall across some categories, particularly on fresh lines. Some ambient products had fallen at a slower rate. As such, Sainsbury’s said it was focusing its Nectar Prices offers on “big brands” like Cathedral City Cheese and Persil washing up liquid to counter this.
Sainsbury’s had invested a further £118m in lower prices during the first half of the financial year, with the majority of the focus being on “centre of the plate products” that customers buy most often, for example pasta and fishfingers.
Roberts said that Sainsbury’s would continue to pass any falls in inflation on to customers “as quickly as we can”, however warned that inflationary pressures remained in the industry, including labour and energy costs, and not all commodities were coming down.