Sainsbury’s sales slide amid rivals' resurgence

Sainsbury's

Sainsbury’s like-for-like sales dropped 1.1 per cent in the during the 16 weeks to 24 September as it continues to face what boss Mike Coupe described as a “very competitive and dynamic environment".

The retailer, which completed its £1.4bn buyout of Argos earlier this month, said that it had not been distracted by the sale and continued to pump investment into key areas such as the relaunch of its ‘On the Go’ range, click and collect and the opening of an additional nine convenience stores.

Coupe claimed that while sales are down, its internal metrics show that customer satisfaction up.

“It doesn’t feel like we’re distracted. I would stand by the fact we’re executing what we planned to execute,” he said on a call today (28 September).

For the first time, Sainsbury’s also released Argos’ quarterly results, although Coupe refused to give any detail on how the combined business will run. It reported a 2.3 per cent increase in like-for-like sales for its second quarter to 27 August.

Saisbury’s is facing increasing pressure to return to steady sales growth as the discounters Aldi and Lidl begin to make waves in previously untapped markets – such as the south of England – while rivals closer to home Tesco and Morrisons continue post promising figures.

Morrisons noted its third consecutive quarter of like-for-like growth earlier this month, while last week Tesco posted its best sales performance since March 2014, according to Kantar Worldpanel.

“Sainsbury's is facing a resurgent Tesco and Morrisons. In the next 12 months Asda will also start to regain its footing, and Aldi are in fighting talk, standing by their pledge to be the lowest priced grocer,” said Phil Dorrell, partner at consultants Retail Remedy.

“Quite simply, Sainsburys footfall is falling short.”

However, it is hoping to retain customers tempted by Amazon's new grocery offering with the recently announced Chop Chop one-hour delivery service.

Coupe said it's being positioned as an "emergency-type service" for people who might forget products from a bigger shop and predicted that this aspect of the market would expand.

Although he declined to reveal how many people had tried Chop Chop, he indicated surprise at the type of customer using it and said it was giving back some “interesting” insights.

Pressure, then, is heightened for its newly appointed advertising agency Wieden + Kennedy after it took on the account in August. Little has been said on what Sainsbury's plans to do differently, but this latest slow down shows that communicating a more compelling offer, beyond price, is what's needed to convince shoppers away from rivals.

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