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Sainsbury’s is paying the price for the grocer war

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In the first half of the year Britain's second biggest supermarket, Sainsbury’s profits were hurt and despite being the only one of the “Big Four” grocers to have experienced a rise in sales, it’s paying the price to fight in an aggressive grocery war with margins and profits feeling the effect.

Analysts are predicting a 24% fall on the previous period.

Tesco Chief Executive David Lewis, appointed over a year ago after sales dropped under Philip Clarke, has closed failing stores and sold off non-core businesses in a bid to boost its key UK operation. In light of this, brokers had feared Sainsbury’s more luxurious offerings would weaken the group’s statistics in comparison to a resurgent Tesco. However, Sainsbury’s was the only one of the major supermarkets to see sales rise by 1.1% to 16.1% market share in the 12 weeks to October 11.

Sainsbury’s, Britain’s second largest grocer, is expected to demonstrate strong trading when it posts its half-year profits on Wednesday as the supermarket sector continues to face growing pressures.

Chief Exec Mike Coupe, has been credited with responding well to customers’ demands by slashing prices in a bid to compete with Aldi and Lidl and maintain its market share.

Coupe has plans underway to reinvent Sainsbury’s shops and increase profit from its prepossessed space. The grocer sold 281 in-store pharmacies to Lloyds Pharmacy as part of a £125m deal, and the leading supermarket opened its smallest convenience store in Holborn earlier this month, and has announced it could have around 1,000 new “mini store” formats in the pipe line. 

Published on Monday 09 November by Kelly Griffiths

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