Sainsbury’s problems grow as no recovery plan offered, says GlobalData

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Following today’s release of Sainsbury’s figures for the 16 weeks ending 29 June 2019, Thomas Brereton, retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘The myriad of negative growth figures covering Sainsbury’s eagerly awaited Q1 results appeared with little shock this morning, with formidable year-on-year market growth comparables fusing with the ongoing woes of the supermarket to create a thoroughly unappetising dish for all involved. Figures of particular concern include the worse than anticipated 1.6% decline in ex. fuel l-f-l sales and the unhealthy performances across General Merchandise and Clothing (-3.1% and -4.5% respectively), and seem dangerously close to nudging Sainsbury’s future prospects from challenging to disastrous.

“But possibly more worrying than the figures is the distinct lack of a recovery plan being offered at this stage. Although the update stated laudable achievements in technology investment (such as 148 supermarkets now offering the SmartShop self-scan process and 206 Argos stores offering Pay@Browse) alongside a brave pledge to invest in 400 supermarkets this year, this offers little assurance that fortunes will improve any time soon. Mike Coupe’s position (as well as remuneration) has come under fire in recent months, exacerbated by the share price hitting a 30-year low at the end of June, and such a sidestep of a progress update will only heighten pressure that he should now be facing the music rather than singing along to it.

“Nursing Sainsbury’s back to health is now a difficult and unenviable task to say the least – whoever may be at the helm. The intense pressure from the value players has created problems across the rest of the market, but Sainsbury’s seems to have taken the brunt of the grocery revolution, caught in-between focusing on price (like rival Tesco has done) and focusing on product and service (such as Waitrose). Although Sainsbury’s is trying to compete – such as recently reducing prices on over 1,000 own-brand products to save customers 18% on an average basket spend – its more premium image means it will continue to stumble if it tries to overcome its competitors on price. Instead, Sainsbury’s needs to unearth and address the concerns closest to the hearts of its shoppers where other grocers have struggled; a particularly good example would be sustainability, with Sainsbury’s shoppers significantly more likely to consider the sustainability of the food they buy than those shoppers at its Big Four rivals.”