Online sales deliver success for Sainsbury's

Wednesday, 20 March 2013 09:18

Sainsbury’s has unveiled higher sales and an increase in customer numbers over the last 12 months.

The supermarket was also one of the main beneficiaries from the horsemeat scandal that engulfed many supermarkets operating in the UK.

Sainsbury's has also seen a big increase in the number of online shoppers who use its services which has contributed to its recent success. This has been emphasised by the decision of rival grocer Morrisons to establish an online presence after acknowledging it was losing business by not having one.

Sainsbury's also warned its biggest rival Tesco that it would be monitoring Tesco's latest price promise promotion to ensure that it was accurately using comparison prices from its store.

Chief Executive Justin King said it is impossible for Tesco to compare like-for-like with its own label products.

Mr King said: “We think the vast majority of our Own Label is not comparable to that of our competitors and we know from our customer research that the reason they like Brand Match is that it is clear, straightforward, they know exactly what it is. Those brands are of course completely comparable supermarket to supermarket.”

He added: “There is a new protocol that was agreed with the ASA about a year or so ago where the first place that you go, if someone is advertising something you think is unfair, you go to them. So you can be sure we will be pointing out to Tesco where we believe their own-label products are being unfairly compared to ours.”

Sainsbury’s announced a 2.1 per cent increase in sales in the year ending March 16th. The sales rise was particularly pronounced in the last quarter with total sales including fuel up by 7.1 per cent. Total sales excluding fuel were up by 6.3 per cent. Shares in Sainsbury’s were up by 2.5 per cent in early trading.

Like-for-like sales in the fourth quarter were up by 4.2 per cent including fuel and by 3.6 per cent excluding fuel.

The highest proportion of sales growth came from non-food products, with sales of clothes up 20 per cent on the year before, homeware sales up by almost 25 per cent and non-food sales almost reached £1 billion and are growing at three times the rate of food sales.

The figures were better than expected and are the 33rd consecutive quarter in which sales have risen.

Justin King said: “We have delivered strong sales in the fourth quarter, increasing market share and outperforming in what remains a tough retail environment.
Sainsbury’s is the UK’s third largest supermarket after Tesco and Asda and has been increasing its market share over the last two years.

Online sales saw a rise of almost 20 per cent over the year and Sainsbury’s now delivers to 190,000 customers each week.

Mr King said that one-off factors helped sales rise in the final quarter.

He said: "Valentine's Day and Mother's Day were both particularly strong this year, and we closed the quarter with a very successful Red Nose Day, presenting a record cheque for £10.5m on behalf of customers and colleagues."

Sainsbury’s sales appear to have benefited from the fact that no horsemeat has been found in any of its meat products, unlike its main rivals Tesco and Asda.

Mr King said this may be down to the fact that Sainsbury’s has "invested heavily in our supply chain and sourcing credentials over many years".

Mr King said: "Our values are a long-term, strategic point of difference. The issues experienced by the industry over the last quarter underscore the importance of our detailed understanding of our supply chain."

"Our focus on quality is an important reason why customers choose to shop with us, and why we are seeing strong growth in our own-brand products."

Clive Black, analyst at Shore Capital, said: "Whilst we cannot be certain, we do believe that the supermarket chain has not been impacted to the same negative extent as Tesco UK from recent meat contamination issues.

"In this respect, Sainsbury points out that it has been DNA testing for ten years and that it purchases all of its fresh poultry -although this may not mean frozen poultry and chicken used in ready-meals - from the UK, whilst all of its beef comes from the British Isles.


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