Sainsbury’s annual report reveals a considerable improvement in its grocery market share performance, although the CEO believes that the upcoming year will present several challenges for the business. As part of its Food First strategy, Sainsbury’s is investing time, energy and resources into new low-priced products, and exceptional customer service.
To pursue this strategy, Sainsbury’s invested over £560 million to keep prices lower in the last two years, £10 million more than its commitment announced in December. By doing so, the retailer improved its price position against all competitors by up to 16%, which significantly uplifted its market share. As a part of its future plans, Sainsbury’s launched its Nectar Prices scheme and personalised discounts under Your Nectar Prices. The active users of Your Nectar Prices are saving almost £200 per annum on shopping.
Sainsbury’s is also exceeding innovation targets by launching more Taste the Difference products, which is helping the business grow significantly around big events as customers increasingly celebrate at home. The supermarket chain is planning to reduce its own-brand range of salted butter from £1.99 to £1.89 for 250g packets and reducing the price of its own-brand bread from 85p to 75p. This is coming as global wholesale food prices decline, despite high food inflation in the UK.
Sainsbury’s 2023 financial highlights include an increase of 5.2% in retail sales, excluding fuel sales growth of 2%, and group sales rise by 5.3%, excluding VAT, in 2023 Q4. Grocery sales have grown due to inflation and improved market share performance, with Q4 grocery sales increasing by 7.4%.
Despite the declines, underlying profit before tax for Sainsbury’s was £690 million, a year-on-year decrease of 5%, which reflects annualisation of COVID-19 driven grocery volume, investment in the customer proposition and operating cost inflation; however, itoffset by operating cost savings and lower finance charges.
Simon Roberts, chief executive of J Sainsbury plc, claims that they are determined to battle inflation for customers and remain the best value compared to competitors. Sainsbury’s is working closely with suppliers and farmers, and £66 million of additional support has been provided to British farmers in the last year. Roberts is confident that Sainsbury’s will continue to deliver for its customers, colleagues, communities and shareholders, even as the year ahead will undoubtedly pose challenges.
