Sainsbury’s saw a return to volume growth in its most recent quarter, as the supermarket hails falling food inflation.
In the 16 weeks ended 24 June 2023, the supermarket’s grocery sales grew 11%, while its total retail sales (excluding fuel) grew 9.2%.
Sainsbury’s is outperforming its competitors, it claims, citing Nielsen data which shows its volumes grew at a greater pace year over year versus all of its rivals, bar Aldi, in the 15 weeks to the 17 June.
“The majority of the growth in our food performance has come from a volume growth rather than inflation,” CEO Simon Roberts told media on a call today (4 July).
“We think customers are really seeing now the improvements in our value… and that’s really driven our volume performance in the quarter.”
The supermarket said it has invested £60m in lowering prices since March, in addition to the £560m it invested in its last financial year. This investment, along with the launch of exclusive loyalty discount scheme Nectar Prices, has been crucial in improving value perceptions and driving volume, the supermarket claimed.
However, Roberts was reluctant to predict whether the volume growth Sainsbury’s saw in its first quarter would continue throughout the year, despite his assertion that “food inflation is starting to come down”.
The quarter saw a number of Bank Holidays, such as the additional one for the King’s Coronation, which the supermarket was able to tap into, as well as hotter weather in June. These events and the weather gave the retailer a boost, Roberts admitted.
“As we look ahead, the comparators get tougher for us, and we think there was a number of one-off events, as it were, in this quarter that that gave us some tail winds in the volume performance and in the sales growth, we wouldn’t expect all of them to continue,” he warned.
Driving value perceptions
In recent times, supermarkets have been accused of ‘profiteering’ by not passing on savings from falling inflation to consumers.
Commenting on today’s results, the Chartered Institute of Marketing’s CEO, Chris Daly, said Sainsbury’s move to cut prices of key items would be a “welcome move” to shoppers and might help to stave off ‘greedflation’ accusations.
“In a challenging landscape for all retailers, it’s crucial that Sainsbury’s is seen by its customers to be doing the right thing by them as well as their shareholders,” Daly added.
In today’s results call, Roberts stated Sainsbury’s commitment to value.
“We spend all of our time trying to assure customers we’re giving them great value,” he said.
We’ve seen more and more of the big manufacturers wanting to work with us because Nectar Prices is really connecting with customers.
Simon Roberts, Sainsbury’s
As part of that, the supermarket has been investing heavily in its entry-level range. It has been moving its private-label value products under one single brand, Stamford Street.
The value own-brand range now includes around 200 everyday products and is designed to make entry-level products more visible and appealing on-shelf and online. More than 40% of the Stamford Street range is included under Sainsbury’s Aldi Price Match initiative.
The supermarket’s own-brand sales grew 13% year on year, with entry price-points being “by far and away the fastest growing product tier”.
The Nectar Prices initiative is also helping to drive value perceptions, Roberts said. The initiative, which gives loyalty scheme members access to exclusive discounts in supermarkets and online, was launched during the quarter.
Sainsbury’s claims its customers have already saved more than £90m through the scheme, and that it has seen 1 million sign-ups to the digital loyalty scheme since the launch of Nectar Prices. The scheme now covers more than 3,000 products.
Nectar Prices is appealing to brands and manufacturers, as well as consumers, Roberts claimed, speaking about the retailer’s relationship with its suppliers.
“We’ve seen more and more of the big manufacturers wanting to work with us because Nectar Prices is really connecting with customers,” he said.