Sainsbury's, the UK’s second-largest supermarket chain, posted a 1.1% sales drop in the festive quarter, a trend blamed on “consumer uncertainty” and its decision to reduce promotional activity during Black Friday.
While overall sales were down in the group, that also includes Argos, it said like-for-like grocery sales were up by 0.4%. Online groceries were up 6.0% and convenience store sales 3%. The wider slump can partially be attributed to a reduction in Black Friday promotions.
Chief executive Mike Coupe said: “Christmas came late this year and I am pleased with the excellent service and availability that we gave customers across the group.”
He noted: “Sainsbury’s stores were well set up to deal with customers doing their big Christmas shops later than usual.”
As a result of this, he said that its “convenience stores hit a new record on Christmas Eve”. During the period he also pointed to the fact that 20% of the group’s sales started online.
Another change worth noting is the fact it expanded its meat-alternative products, now selling more than 100 plant-based products. It said its Free From category grew by 14% in the quarter to contribute £100m to annual sales.
He 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.”
All in all, the retailer branded its performance as “solid” and said Argos had outperformed a weak market. This comes as Sainsbury’s awaits the go-ahead from the competition watchdog to merge with rival Asda.
Ray Gaul, vice president of research and analytics at retail consultancy Kantar Consulting told The Drum that despite the challenges it faced in the quarter, Sainsbury’s continues to reposition as a “multicategory and multiservice business has invested in true innovation”.
He added: “The company will look forward to rolling out new initiatives to more stores and online as they experiment with new offers in ‘health and wellness’, ‘food markets’, and ‘beauty’. These innovations should give hope to a company that is plodding through results in preparation for a potential merger with equally-sized rival Asda-Walmart.”
According to the Gaul’s research, Sainsbury’s Christmas spot, ‘The Big Night’, a school play that sees a school performance capped up with a child dressed as a plug jump into an electrical socket, “failed to capture any of the top spots in consumer ad engagement measures.”
The work by Wieden+Kennedy London and directed by Michael Gracey did create substantial noise online after its Plug Boy inspired national press coverage and discussion, this including a potential ad watchdog investigation for inspiring dangerous behaviour in children.
Earlier this week, rival Morrisons reported a 0.6% rise in sales over Christmas.