Sainsbury’s boss says focus on improving quality is working despite sales falling again

Sainsbury’s says it is confident its investment in product quality will give it an advantage over its big four rivals as the retailer announced a 1.9% drop in like-for-like sales (excluding fuel) for its fourth quarter – the 10 weeks ending 14 March 2015.

Although the decline was slightly better than the 2% fall that it expected, it follows a 1.7% fall in like-for-like sales in the third quarter. Total sales in the fourth quarter, meanwhile, were down 0.3%, excluding fuel.

Chief executive Mike Coupe, however, believes the supermarket giant’s continued investment in own-label quality will hold it in good stead.

“We consistently outperform our major peers on product quality,” said Coupe. “To enhance these credentials further, we announced in November our commitment to improve the quality of over 3,000 products and the rate at which we launch these innovations will increase in the new financial year.”

Coupe appears to have a valid point, with Sainsbury’s quality perception among consumers up 2.2 percentage points over the last 90 days, according to YouGov’s Brand Index calculator.

With a total score of 45.3, it is third out of a list of the 26 biggest UK grocers and only behind premium retailers M&S and Waitrose.

The investment in quality follows the departure of Sainsbury’s head of own brand marketing Kirstin Knight, who left the supermarket after 20 years in February. The supermarket giant said her role would be replaced internally and broken up as part of an ongoing internal restructure of its marketing division.

But despite today’s insistence on promoting quality, Coupe also said he expects food deflation to continue over the whole of 2015, with a continued commitment to lower prices inevitable.

“We expect the market to remain challenging for the foreseeable future,” he added. “Food deflation, which is currently running at about 2.5%, is likely to persist for the rest of this calendar year, and competitive pressures on price will continue.”

Sainsbury’s has lowered the prices of more than 1,100 products since November in a bid to win and retain customers in a tough trading environment, which has seen it struggle to match the growth of the discounters Aldi and Lidl, as well as upmarket retailer Waitrose.

Coupe said there had been a sales uplift of around 3% on the 1,100 reduced price items.

Sainsbury’s started the year with the biggest marketing spend of Britain’s supermarkets after increasing its year-on-year spend by 11% to £4.6m and its price-conscious ads, which talked up its in-store price cuts and budget frozen foods, prominent on TV screens.

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Comments
  • Shoppercentric 17 Mar 2015 at 11:23 am

    If Waitrose at the upper end of the market are starting to feel
    the discounter hit, it’s little wonder that we hear Sainsbury’s continue to
    struggle. Their mid-market version of quality is a hard one to push, especially
    when the discounters are winning product awards at significantly lower prices.

    The opening of further Netto stores should help with their direct
    challenge to the discounters, but there’s a clear need for the Sainsbury’s brand
    to reconnect with shoppers.

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