Sainsbury’s malaise deepens as sales slip yet again

Britain’s big four supermarkets face an uphill battle to return to growth after Sainsbury’s reported its like-for-like sales continued to deteriorate for the fifth consecutive quarter after notching up a further 1.9 per cent drop in the 10 week period to 14 March, excluding fuel.

Overall sales were off by 0.3 per cent as the chain was squeezed by the need to introduce price cuts and ongoing deflation within the industry.

To add to the pall of gloom Sainsbury’s now expects the sector to ‘remain challenging for the foreseeable future’, suggesting no end in sight to its present malaise.

In what is scant comfort to the retailer its main rivals; Tesco, Asda and Morrisons, are also enduring a similarly torrid time as they battle to see off upstart challengers Aldi and Lidl.

John Ibbotson, director of the retail consultants, Retail Vision, commented: “Sainsbury's did marginally better than expected in the fourth quarter but it still has one hell of a fight on its hands. As with the rest of the Big Four, it’s do-or-die time.

"With Tesco slowly dusting itself off under Dave Lewis, and its market share almost twice that of Sainsbury's, it holds all the cards in the price game, with bigger margins to give back to its customers.

"In today’s supermarket world, price will always trump quality, range and store standards. Brand is no longer something brands can rely on to bail them out.”

Phil Dorrell, director of the retail consultancy Retail Remedy, added: "As silver linings go, it's not a bad one. The value of sales is down, but volume is up as Sainsbury's aggressive discounting has lured more people through the door.

"The Sainsbury's marketing department should focus less on winning awards and concentrate on giving customers a reason to visit their stores every week. Overthought and fussy campaigns like their 'Christmas in the trenches' ad might garner column inches and clicks, but in the current price conscious market are unlikely to convert into enough sales to justify the expense.”

Despite these headwinds some parts of the business have performed well; notably general merchandise and clothing which rose 6 per cent from last year and convenience outlet sales, which increased by 14 per cent.

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