Following today’s release of Sainsbury’s figures for the 28 weeks ending 16th September 2023; Joe Dawson, retail analyst at GlobalData, a leading data and analytics company, offers his view: “Sainsbury’s positive H1 results have shown a resilience in the face of discounter competitors and effectiveness in adapting to new consumer behaviours and trends, with the retailer reporting a 7.7% increase in group sales to £18,865m for the 28 weeks ending 16 September 2023. Building on strong numbers in Q1, the UK’s second largest grocer expects to see profits in the upper half of its previous guidance, now between £670m and £700m, owing largely to impressive 10.1% food & grocery sales growth as the supermarket continues to invest in low prices and its loyalty scheme. These figures are only slightly lower than rival Tesco which reported an 8.9% increase in total revenue excluding fuel and VAT and a 10.6% rise in food sales, for the 26 weeks ending 26 August 2023.
“Food & grocery was indeed the star of the show in Sainsbury’s H1, as its Food First strategy paid off. Sainsbury’s drove volumes by inflating at a slower rate than competitors having invested £118m in price cuts and rolling out its Nectar Prices loyalty scheme to offer discounts on over 6,000 products. Sales through supermarkets increased 10.8%, reflecting an increase in consumers doing their full weekly shop at Sainsbury’s as targeted price reductions on staple products improve value perceptions, particularly for its core family-centric customer base. Price aside, innovation also proved to be a strong driver for consumers, with volumes of premium own brand range Taste the Difference increasing 8.4% in Q2. Sainsbury’s convenience Local format also performed well, with sales growing 10.5% following nine store openings and improvements to its Food to Go offer. Online grocery sales were up 2.3%, albeit against a very poor comparative in 2022, and will be a point of interest in golden quarter trading following the just announced extension of the Your Nectar Prices scheme to online orders.
“The focus on food saw non-food propositions taking a backseat in H1, with general merchandise growing by only 1.1% and clothing down 8.4% as British summer weather disappointed customers and retailers alike. The slow general merchandise growth was driven by a positive performance from Argos, where sales were up 1.7% despite the cessation of its operations in Ireland, due to the popularity of its consumer electronics and technology offering and its 50-year celebrational promotions. While clothing sales were down year on year due to the adverse summer weather, the impact of this was well managed with the grocer maintaining full price sales of its TU range in a highly promotional market, and the retailer will be in a better place in terms of stock control going into the busy festive period.”
