Sainsbury’s insists marketing tactics paying off despite another sales dip

Sainsbury’s insists its focus on values, quality and value rather than blanket price cuts will pay off despite suffering its second consecutive quarter of declining sales. 

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Sales from stores open for a year or more fell 1.1 per cent in the three months to 7 June, an improvement on 3.1 per cent decline in the previous quarter, which marked the first time Sainsbury’s sales had fallen into the red for nine years. 

Sainsbury’s is under the same pressure from the rise of discounters Aldi and Lidl, who are stealing market share and have spurred shoppers to spread their weekly shop around, as its big four rivals.

Tesco, Asda and Morrisons have announced huge price cuts for everyday items but Sainsbury’s has so far sat out the price war. 

In a statement, chief executive Justin King, who steps down next month, says initiatives such as Brand Match, which sees customers issued with vouchers for the difference if it’s found that they could have paid less at Tesco or Asda, “reassures customers that it is competitive on price for their branded shop”.

The supermarket also stressed investment in the quality of its own brand range creates “a key point of difference”. Like for like sales of Taste the Difference grew 10 per cent in the quarter.

It has also continued to focus on its values, the provenance and environmental credentials of its products and service, in ads. 

Sainsbury’s sales reverse has not been as dramatic as Tesco and Morrisons, who have suffered dips of 3.8 per cent and 7.1 per cent respectively in their latest quarter. Only Asda has reported increasing quarterly sales. 

In a note to investors, retail analyst Conlumino says despite the short-term hit to sales, Sainsbury’sbalanced brand investments” and decision to opt-out of the price-cutting engulfing rivals mean it will “prevail in the longer term as consumer confidence improves”.

“Through more rationalised pricing commitments on shopping basket staples and via its brand match, we firmly believe that Sainsbury’s will emerge stronger as the market spend picks up.

”Staying true to its values, evidenced by developments of its upper tier Taste the Difference and mid-level by Sainsbury’s own-labels, matched by some best-in-class service standards, Sainsbury’s will retain its distinctive identity as its rivals converge around a narrower concept of value, built around sales volumes rather than values.”

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