Sainsbury’s struggled over the Christmas period to keep pace with its rivals after recording a 1.1 per cent drop in like-for-like sales over the Christmas period.
Mike Coupe’s outfit did show better in their grocery department with a 0.4 per cent increase over the past 15 weeks, although last year’s Q3 grocery sales were at 2.3 per cent growth.
General merchandise sales fell by 2.3 per cent with its clothing offering falling 0.3 per cent. Coupe said sales were affected by a late Christmas and “cautious customer spending”.
“Christmas came late this year and I am pleased with the excellent service and availability that we gave customers across the Group. Sainsbury’s stores were well set up to deal with customers doing their big Christmas shops later than usual and Convenience stores hit a new record on Christmas Eve,” Coupe said.
“Retail markets are highly competitive and very promotional and the consumer outlook continues to be uncertain. However, we are well placed to navigate the external environment and remain focused on delivering our strategy.”
Part of that strategy will be investing in meat-free alternatives according to Sainsbury’s, stating it is a leader in the free-from market, of which its sales grew by 14 per cent in the quarter, contributing £100m annually.
Richard Lim, chief executive of Retail Economics, said Sainsbury’s difficulties echoed a wider slowdown in consumer confidence, with Aldi and Lidl picking up customers from the larger supermarkets.
“These results aren’t disastrous but demonstrate the significant challenges faced by the big grocers. Fiercer competition from the discounters, massive price investment from key competitors and shifting shopper behaviour have created a pressurised trading environment. Market share continues to slip away to the German discounters,” Lim said.
“The industry is amid a painful readjustment. With such seismic changes afoot, the relationship between retailers, wholesalers and further down the supply chain could result in game-changing consolidation within the industry.”
Lim added that the ongoing struggles of established retailers could see further pressure put on the supply chain. “The focus in 2019 will be on changing supply chain dynamics which could see further consolidation and collaboration as the drive for efficiency is necessitated by scale.”
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