UK Sainsbury's Sainsbury’s Records Strong Uplift

Lisa Byfield-Green (Senior Retail Analyst)
04 July 2017

Sales of warm weather items including fruit & vegetables, summer clothing and fans boosted Sainsbury’s first quarter sales. Retail sales increased 2.7% during the period with like-for-like sales up 2.3%.

The retailer cited strong sales in grocery, boosted by its Summer Eating ranges as well as its price positioning.  Its differentiated strategy, including its Argos acquisition, also helped to drive momentum. Online and convenience remained the fastest growing channels, up by 8% and 10% respectively. 

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Lisa Byfield-Green (Senior Retail Analyst)
Lisa Byfield-Green (Senior Retail Analyst)

Opinion Multichannel Future

04 July 2017

As proven by Amazon’s recent move to acquire Whole Foods, the future of retail is multichannel and this is where Sainsbury’s has also been gathering its strength, bolstered by its Argos acquisition. Mothers’ Day, Easter and the Red Nose Day charity day all played into stronger results for the retailer during the quarter, but there is no doubt that its more diversified multichannel strategy reaped rewards too.

Sainsbury’s now has 212 digital collection points in its supermarkets for DPD, eBay, Tu clothing and Argos items. It is also trialling collection points in six convenience stores. Online and mobile sales at Argos rose by 10%, with same-day delivery of fans and paddling pools during the hot weather providing a particularly strong sales boost. Online grocery grew by 8% and convenience by 10%. These strengths boosted results for the more diversified retailer, which at the same time remains keenly focused on its core grocery category. Grocery sales also jumped 3%, boosted by the launch of 430 new and improved products, including 250 Summer Eating lines.

There was no mention in its results presentation of convenience retailer Nisa, with which Sainsbury’s is reported to be in exclusive discussions for a potential GBP130mn (EUR158.64mn) takeover. Nisa recorded GBP2.8mn (EUR3.42mn) pre-tax profits for its last financial year, back in the black after losses of GBP5.4mn (EUR6.59mn) in 2016, despite a 2.6% sales drop. Its 1,400 members would need to approve any takeover by Sainsbury’s and this may prove to be a sticking point as the retailer has always been fiercely independent. However, with Argos and Sainsbury’s, Tesco and Booker, Amazon and Whole Foods, consolidation, differentiation and multichannel appear to be the keywords for maintaining a strong performance in the highly competitive retail landscape.

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