Sainsbury’s focus on value pays off as it takes market share from discounters

Sainsbury’s has recorded strong retail sales growth in the first half of its financial year, having eaten into the market share of Aldi and Lidl for the first time.

SainsburysSainsbury’s claims it is the “most competitive” it has ever been, with its focus on value helping it take market share from its discounter rivals, citing data from Nielsen.

Its focus on price matching, benchmarking its products against Aldi in particular, has led to increased sales, the supermarket said today in its results for the 28 weeks to 16 September. Grocery sales for the period are up 10.1% against the previous year, which it attributes to a further £118m investment in lowering prices. The Aldi price match in particular now applies to more than 400 products in store.

Sainsbury’s also states that more customers are using its supermarkets for their entire “full basket” shop – and it is “gaining volumes from every supermarket including limited-choice [Aldi and Lidl] competitors” as a result. It follows an aggressive effort to push back against the discounters’ taking market share from the traditional big four supermarkets.

Its price matching initiatives are also leading to better value perceptions, which the supermarket says are improving “consistently”. Sainsbury’s CEO Simon Roberts hailed the ongoing impact of food inflation reduction, stating: “We’ve never been more competitive on price and our focus on value, innovation and service is giving more customers more reasons to shop with us.”

Sainsbury’s credits value drive for return to volume growth 

Market analyst CSAT’s Competitor Benchmark pegs Sainsbury’s value perception score for the 28 weeks to 16 September as the highest to date, suggesting its ongoing push around price and relative value is succeeding.

The brand is also positioning itself for a good revenue period around Christmas, with its seasonal campaign set to launch imminently. Roberts says: “We’re ready to give customers at Sainsbury’s and Argos everything they want to have a brilliant Christmas. As we head into this key trading period, we are encouraged by our strong momentum and we remain fully focused on delivering for customers and shareholders.”

The retailer also said the expansion of its Nectar Prices discount offers for members is bearing fruit, with over 3 million new ‘Nectar Digital Collectors’ added to its books since April. The expansion in terms of both the range of products available via the scheme, which now stands at 6,000, and its roll-out to online has saved customers £450m since launch.

Despite its success in the grocery sector, Sainsbury’s clothing sales were down 8.4%, which it says is due to “a disciplined trading approach in a seasonally weak and promotionally-driven market”.

The company also said it is on track to deliver £1.3bn of cost savings by March 2024, “future-proofing our business with a structurally lower cost base and fuelling investment in our customer proposition”. The ongoing ‘Save to Invest’ scheme led to overall retail operating profit of £485m, up 2% year on year, though this was partially offset by the impact of “weaker seasonal sales on general merchandise profits”.

Sales for the group – including Argos and Tu – stood at £18.9m, a 2.9% increase on the same period for the previous year, when it was £18.3m.