Sainsbury’s chief executive Justin King has insisted the UK retailer is well positioned to continue to benefit from its focus on offering quality products as competition in the category steps up.
The company, which today (21 March) booked a 2.6% increase in fourth-quarter same-store sales, insisted it has won market share by broadening its appeal through a focus on quality and a simultaneous drive to highlight price through its Brand Match marketing campaign.
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“I think we have demonstrated that through delivering quality and value, universal appeal for our customers, we can continue to grow,” King said during a conference call.
He said through Brand Match Sainsbury’s has “convinced customers that you can have the best of both worlds” – brands delivered at competitive prices and “the best” own-label offering in the market, particularly in fresh.
King added Sainsbury’s has seen an up-tick in families shopping at its stores, proof, he claimed, that the retailer had successfully shrugged off its high-end reputation and broadened its appeal to those on tighter budgets.
King said Sainsbury’s had seen a growing trend for consumers to save money on some products by purchasing its Basics range, in order to splurge on “treats” from the retailers top-tier Taste the Difference range.
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By GlobalData“What we are seeing across the whole spectrum of shoppers is a need to save money in order to also indulge,” he said.
King’s comments follow announcements heralding an increased focus on fresh products and service from rivals Tesco and Morrisons.
Earlier this month, Tesco said it is upping its investment in quality, placing particular emphasis on fresh food, in a bid to improve its UK sales trends, which have lagged the market. Meanwhile Morrisons, the UK’s fourth-largest supermarket company, has started rolling out an extended “Market Street” concept designed to make the shopping experience “experiential over purely functional”.
However, King remained confident. “If all of our competitors are starting a conversation about the quality of products that is a good thing. That is a good thing for us because we lead on quality.”
Joining the debate on the viability of big-box outlets, which have come under pressure from online and convenience sales as well as consumers cutting back on non-essentials due to poor economic conditions, King insisted Sainsbury’s larger stores of 80,000 – 100,000 square feet were performing “well”.
“We don’t recognise the conversation that is taking place about how badly big shops are doing. Ours are doing well,” he insisted.
King said that, while larger floor space did mean an increase in non-food merchandise, Sainsbury’s differentiated its larger stores by keeping them “food stores”. In the long run, King suggested Sainsbury’s expects to see entertainment sales shrink but added that clothing and home sales were not expected to see significant online migration.
