Sainsbury’s sales have fallen for the second consecutive quarter, with the retailer citing deflation in food prices.
Like-for-like sales at the supermarket, excluding fuel costs, were down 1.1 per cent, while total retail sales dropped by 0.4 per cent in the 16 weeks to 24 September.
Despite this disappointing sales performance, the supermarket insisted that it was continuing to make progress with its strategy of investing in everyday low pricing in favour of multi-buy promotions.
The retailer enjoyed like-for-like transaction growth and total volume growth, which chief executive Mike Coupe said was evidence that “consistently choosing Sainsbury’s” for the choice, quality, value and customer service.
Coupe added that although the market will remain competitive and “the effect of the devaluation of sterling remains unclear”, he is confident that Sainsbury’s will “continue to outperform” its major rivals.
In an ongoing battle to fight off competition sparked by the success of Aldi and Lidl, Britain’s second-biggest retailer has cut prices on everyday products including brocolli, onions, Margherita pizza and its own brand nappies. And it reported that it had recorded its highest-ever customer satisfaction scores in the past two quarters.
But retail expert Julia Palmer at Begbies Taylor was less positive about Sainsbury’s performance, saying it had “failed to turn around its weak sales performance.” She contrasted this with “the recent momentum seen by two of its largest competitors, WM Morrisons and Tesco, whose recovery seems to be gathering pace.”
Commenting on growing competition within the retail sector, she added: “The supermarkets’ ongoing battle for market share looks set to intensify still further, with Aldi reporting plans to steal yet more customers from its larger rivals with a revamp of its stores and ambitions to have a presence on every high street.”
In an effort to find an edge over its competitors, Sainsbury’s is looking to increase its non-food retail offering. At the beginning of September the supermarket chain completed its acquisition of Home Retail Group, allowing branches of Argos and Habitat to be incorporated in some stores.
The supermarket group reported that Home Retail Group’s like-for-like sales in the second quarter to 27 August, before the acquisition, were up 2.3 per cent.
Sainsbury’s has also made efforts to improve its online delivery service retailer’s online grocery delivery service, which grew by eight per cent in sales and 12 per cent rise in customer orders.
The supermarket has begun trialling same-day deliveries, available from eight stores, as well as a one-hour bicycle delivery service called Chop Chop in London.
