Oriel Securities analyst Jonathan Pritchard told Marketing Week he expects Sainsbury’s like for like sales to be down 1 per cent when the supermarket posts its trading update later this week (8 January). Shore Capital said Sainsbury’s would have “endured falling like for like volumes”, while analysts Jefferies told The Telegraph that sales at the supermarket are likely to be down by 1 per cent.
The news is also bad for the other three of the big four supermarkets. Pritchard expects sales at Tesco to be down by 3 per cent, while Shore Capital’s Clive Black said it was “not inconceivable” that each of the big four had negative like for like sales, predicting drops of between zero and 2 per cent.
A fall in sales at Sainsbury’s would end the supermarket’s run of 35 consecutive quarters of growth. It outperformed the big four supermarkets in its most recent quarter, with like for like sales excluding fuel up 2.1 per cent in the 16 weeks to 28 September.
However, its growth has been slowing, with the latest data from Kantar Worldpanel showing that its share fell to 16.8 per cent in the 12 weeks to 8 December. That marked the second 12-week period in which all four of Britain’s biggest supermarkets lost market share as they come under pressure from both discounters and upmarket grocers.
Shore Capital’s Black says part of the reason for the forecasted drop in supermarket sales at the big four is that households continue to carefully manage spend, ensuring they stick to shopping lists and don’t waste food. However, he says they are also losing out to rivals that are either “cheaper” or “more exclusive and distinctive”.
“The big four represent standardisation, corporatism and oligopoly in a time when folk are increasingly interested in individuality, distinctiveness, the small guy and fairness,” he adds.
Both Aldi and Lidl are expected to post their best Christmas sales figures ever, with analysts forecasting they will have seen double-digit sales growth in December. They both launched marketing campaigns over the festive season that focused on quality and value, a message that seems to have resonated with consumers.
At the top end of the market, Shore Capital says M&S Food and Waitrose are both likely to have gained market share and posted like-for-like sales growth.
Oriel Securities Pritchard says: “There is a polarisation in performance away from the middle ground: we are using Aldi and Lidl at the bottom end and Waitrose and M&S at the top end. Those in the middle ground are getting squeezed and for the likes of Tesco, Sainsbury’s and Morrisons, the only growth angles are convenience and online.”
Asda has today (6 January) moved to assure the City it is confident it will post a solid performance for the Christmas period. In a statement it says: “Our strategy was to focus on gimmick-free, simple every day low price transparency for our customers and to hold our nerve when it came to the sales.”
The firm also said that a record 4.8 million customers used one of its 573 UK stores on 23 December, while online grocery sales exceeded £5m for the first time ever on 21 and 22 December. Asda doesn’t reveal its sales figures for the fourth quarter until 20 February.
The big four supermarkets are hoping to lure customers back in the new year with marketing campaigns promoting big discounts. Sainsbury’s has launched its “biggest ever” January sale, while Asda is running its “biggest ever value campaign”.
“This was against the backdrop of many other retailers vouchering heavily and starting their sales early, and resulted in us seeing record footfall over the Christmas period.”
Tesco will unveil its Christmas trading numbers on Thursday (9 January).