British Retailer Sainsbury’s Struggles Under Pressure From Discounters

07 Jan 2015 --- The British supermarket giant Sainsbury’s has announced like-for-like sales down by nearly 4% in the third quarter results, compared with the same period last year.

Increasing pressure from supermarket discounters like Aldi and Lidl continue to squeeze the supermarket group, which suffered it’s worst Christmas period in ten years, despite serving nearly 30 million customers in the run up to the festive period.

Price cuts introduced throughout 2014 are thought to be partly to blame for the losses, as over 1,000 products were reduced in price in an effort to compete with the ever-popular discount retailers.

Sales at convenience stores, however, saved Sainsbury’s from a worse fate. The company opened 25 new convenience stores last year and it saw growth of over 16% in this sector.

Mike Coupe, Chief Executive, said: "Sainsbury’s has provided a great Christmas for our customers. Food price deflation and falling fuel prices have enabled our customers to treat themselves over the festive period.

"Customers traded up over Christmas as sales of our Taste the Difference range grew by five per cent year-on-year. As an example, sales of our Taste the Difference Conegliano Prosecco grew by over 30 per cent. We also sold over 57 million mince pies and over 550,000 turkeys, up eight per cent year-on-year.

"In November, we announced our plans to invest £150 million in the prices of some of our most popular products. This week we are lowering prices on over 700 of these, including reductions in our Meat, Fish and Poultry categories. For example, the regular price of our 260g boneless cod fillets has dropped from £4.00 to £3.30 and the regular price of a Sainsbury’s 1.35kg British whole chicken has fallen from £4.50 to £3.50. This now means we have reduced the prices of over 1,000 products since we made our announcement.

"The outlook for the remainder of the financial year is set to remain challenging, with food price deflation likely to continue. Our performance in the third quarter showed an improving trend quarter-on-quarter. However, given the uncertainty in the trading environment, food price deflation and the price reductions we announced this week, we currently expect our fourth quarter like-for-like to be similar to that of our first half. Our prices versus our supermarket peers have never been better and alongside our differentiated quality and service offer, we are confident we will help our customers ‘Live Well for Less’ throughout 2015."