Sainsbury’s has credited a strong performance by brands including Argos, Habitat and Tu for improved sales and profits, as the retailer announced a renewed digital push to maintain growth in its online sales.
Speaking live from the Cop26 conference in Glasgow, of which Sainsbury’s is a key sponsor, the retailer reported underlying profit before tax of £371m for the 28 weeks to 18 September, a 23% increase on the first half of last year. Statutory profit before tax was £541m.
Overall sales were up by 5.3%, with a 62.7% increase in fuel sales after a period that saw widespread panic buying. Grocery sales were up by 0.8% compared to the same period last year and by 9.1% compared to the pre-pandemic first half of 2019. General merchandise sales were 5.8% below the high lockdown levels of last year, but 1.1% ahead of 2019 figures.
The group has maintained an increased level of digital sales after consumer behaviour changed during the Covid-19 pandemic. Some 39% of the supermarket’s retail sales were digital during the first half, accounting for income of £5.8bn. As a result the retailer has increased its focus on digital marketing messages, according to Sainsbury’s chief executive Simon Roberts.
We have 8.2 million digital Nectar users now. That is an absolutely critical platform to be able to communicate directly and in a more personalised way.
Simon Roberts, Sainsbury’s
“We find that customers really respond to digital marketing in terms of both value and innovation, so that has been a strong platform for us and we have continued to grow it as more customers have shopped online,” he told Marketing Week at a press briefing today (4 November).
The retailer plans to maintain and drive further growth in digital sales, after being the biggest winner of market share in the online grocery sector during the reporting period. Roberts confirmed Sainsbury’s now has a 21.3% share of the UK online grocery market by value, beaten only by Tesco.
“One of the things that happened during the pandemic clearly is we saw grocery online customers substantially grow and that’s really something we are looking to continue to drive,” he said. “We are doing a lot more functional and influencer communication than we were a year ago, and again we are getting a really good response as we do that.”
Argos, which Roberts described as an “80%-plus” digital business, is likewise driving its digital interactions with customers. Despite the focus on digital, Argos will be launching a conventional Christmas ad at the end of this week, Roberts confirmed.
The power of data
Like other major retailers, including Tesco and Boots, Sainsbury’s is increasing the use of its loyalty scheme data to drive more targeted and effective digital marketing.
The group launched its Nectar Prices scheme in September, offering digital Nectar customers discounts on frequently-purchased Sainsbury’s products.
“We have 8.2 million digital Nectar users now. That is an absolutely critical platform to be able to communicate directly and in a more personalised way with those customers. The launch of Nectar Prices three or four weeks ago was a really clear indication of our commitment to give customers personalised value and offers,” said Roberts.
Sainsbury’s insists its Food First strategy, designed to put food back at the heart of the supermarket brand, has landed well, with Aldi price matching offers helping to grab market share from all rivals in the sector. The supermarket also claims to have invested in service, improving both customer experience and the efficiency of its online offer.
The effort of staff over the last year is to be recognised with the closure of stores on Boxing Day this year to give them more time with their families.
Sainsbury’s expects to report underlying profit before tax of at least £660m for the full year to March 2022.