Supermarket Sainsbury’s experienced its strongest week of trading ever in the week before Christmas despite a slowdown in like-for-like (LFL) sales growth, according to results published today.
In the 14 weeks to January 5th 2013, total sales excluding fuel increased 3.3 per cent while the week prior to Christmas saw customer transactions exceed 27 million.
Between midday and 1pm on Sunday December 23rd 2012, the grocer had secured record sales of £16 million while Christmas Eve brought over £100 million of sales across its supermarkets and convenience stores.
LFLs excluding fuel rose 0.9 per cent on the same period last year and the grocer noted that this reflects 32 consecutive quarters of LFL growth.
However, this represents a significant slowdown when compared with last year’s 2.1 per cent growth and Sainsbury’s CEO Justin King conceded that current market conditions are “challenging”.
But King believes that the retailer is faring well despite broader economic woes, commenting: “This Christmas we have helped more customers than ever to Live Well for Less, delivering another quarter of good sales in a challenging retail environment, increasing market share.”
Yesterday, consumer insights firm Kantar Worldpanel announced that Sainsbury’s is outperforming competitors in terms of market share, increasing its share 0.1 per cent in the 12 weeks ended December 23rd 2012 to 17.1 per cent, while competitors Tesco, Asda and Morrisons reported decreases.
Morrisons also reported a 2.5 per cent LFL decline over the Christmas trading period as it struggled to define itself in a crowded market, highlighting the significance of Sainsbury’s positive performance.
In terms of merchandise, sales of Sainsbury’s’ own-brand products continue to build with sales growing at three times the rate of brands while it’s ‘by Sainsbury’s’ brand is growing at nearly five per cent year-on-year.
Joseph Robinson, Lead Consultant at analyst firm Conlumino, explained the importance of the supermarket’s own-label offering, commenting: “While there are a number of things that Sainsbury’s is getting very right, the grocer’s key competitive weapon continues to be its private label offer.
“Indeed, during this period, its private label ranges grew at three times the rate of branded. Over the last few years, Sainsbury’s has invested heavily in strengthening the appeal of its own-brand offer, with Basics at the value end and Taste the Difference at the more premium end, providing strong protection against polarising demand and crumbling customer loyalty in the sector.
“The grocer’s more recent re-launch of its mid-tier offer, under the by Sainsbury’s sub-brand is also proving a success, achieving strong growth.
“Importantly, own development has served both to strengthen value perceptions, while at the same time reinforcing the grocer’s reputation for quality, innovative products.”
Over the festive season, a record 22 billion Nectar points worth over £110 million were redeemed by cash-conscious shoppers, emphasising the increasing importance of value for money within the competitive grocery sector.
Sainsbury’s Christmas food ordering service reported a 25 per cent year-on-year rise in orders while, over the third quarter, its online business grew at over 15 per cent, fuelled by the popularity of its Click & Collect offering as 60 per cent of general merchandise orders are now collected in this way.
Over the quarter, the chain increased the scope of its bricks and mortar portfolio, opening six new supermarkets, five extensions and 19 new convenience stores and King said the company is on track to open one million square feet of new space by the end of the financial year.
Looking ahead, King concluded: “We expect the challenging economic backdrop to persist, with customers looking to re-balance their household budget after the festivities and so spending cautiously in the first few months of 2013.
“By continuing to help our customers to Live Well for Less through our ongoing commitment to great food, Brand Match, competitive pricing and targeted promotions via Nectar and coupon-at-till we are positioned to perform well over the next quarter.”