The struggle is real for Britain’s third largest supermarket Sainsbury’s, as it updated on its sixth quarter of declining underlying sales this morning amid a tough grocery market.
A fall in supermarket sales was prominent but revenue from Sainsbury's clothing was up over 5%, its convenience business saw double-digit growth and online grocery shopping hit record levels during the quarter.
Still it’s been tough for Sainsbury’s, having reported a drop in pre-tax profits last month of 14.7% to £681m. Undercut by Aldi and Lidl, which are becoming increasingly popular among British shoppers, the big four grocers have been struggling to regain lost market share. For 10 years the supermarket chain enjoyed consecutive sales growth until it was hit, like the other big four grocers, by a combination of falling food prices, the consumer shift towards online and convenience stores as well as the rise of the German discounters.
“These pressures, including the effect of our own targeted price investment, have led to a fall in like-for-like sales for the quarter,” said CEO Mike Coupe in a statement this morning.
In November Sainsbury's outlined plans to cut dividends and new store openings in order to fund an additional £150m in lower prices. It is also focusing efforts on improving the quality of products and expanding its non-food, online and convenience business.
Coupe said he was encouraged by some of the early trends he was seeing in key trading and operational metrics.
“Despite the challenging market conditions, we are confident that we are building on strong foundations and making good progress with our strategy,” he added. “We continue to invest in our broad range of products and services and our multiple channels to market. These areas represent strong future growth opportunities and contribute towards our resilience in the current trading environment.”