Sainsbury’s sees sales grow at slow pace

Sainsbury’s has reported a 7.6% increase in total sales in the 12 weeks to 12 June, buoyed by the success of its Nectar card loyalty scheme and its sponsorship of the 2012 Paralympic Games.

However, the supermarket cautions that low food price inflation and higher fuel costs are still limiting consumer spending.

Despite the increase in sales, like-for-like sales at Sainsbury’s grew by only 1.1%, excluding petrol. Analysts report that the return of VAT to 17.5% after its temporary cut, means that the growth was actually just 0.3%

Justin King, chief executive of Sainsbury’s says: “We have made a good start to the financial year in line with our expectations. While we continue to expect the consumer environment to remain challenging, our universal customer appeal, unique loyalty offer and accelerated growth strategy mean we are well placed to make continued good progress.”

King praised the Nectar loyalty scheme for consolidating “its position as the UK’s number one loyalty scheme with around 17 million registered card holders and regular Sainsbury’s users are up over 800,000 versus this time last year. Nectar and coupon at till are proving to be a winning combination enabling us to deliver relevant and targeted offers which our customers really value.”

He also praised the brand for its commitment to British farming, which has been highlighted in the store’s recent ads fronted by Jamie Oliver and said the London 2012 Paralympic Games “will offer fantastic opportunities for our customers and colleagues to get involved.”

The update comes a day after Tesco said its latest quarterly like-for-like UK sales had also increased by 1.1%, though when the VAT change was taken into account, it grew only 0.1%.

Tesco had said its sales growth was also limited by lower food price inflation, and high petrol and diesel prices meaning customers had less money to spend on other things.

Last month, Sainsbury’s reported a 17% increase in profits to £610m for the year ending 20 March.

The supermarket’s marketing director Gwyn Burr explained to Marketing Week that Sainsbury’s aimed to attract shoppers on a range of budgets by ensuring its Basics, Core and Taste the Difference ranges, together with strong deals on branded goods, were all available and offers were communicated clearly.

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