Sainsbury's sales soar as it goes back to Basics

By BEN LAURANCE FOR MAILONLINE
Updated:

Supermarket giant Sainsbury yesterday unveiled its biggest rise in underlying sales for more than a decade.

The group's performance trounced the most recent sales figures released by bigger rival Tesco. And retail-watchers reckon Sainsbury's sales growth is running neck-andneck with Morrison's.

'We have been confident for a while that we could deliver,' said chief executive Justin King. 'This is another strong period of growth.'

Petrol prices in the quarter to last weekend were far lower than a year earlier, which depressed Sainsbury's overall sales total.

Sainsbury's

But excluding fuel - and knocking out the impact of last December's VAT cut - Sainsbury's like-for-like sales grew by 7 per cent.

The chain has achieved big success with its 'switch and save' campaign to persuade customers to cut their shopping bills by choosing its own products instead of brand names and moving from standard Sainsbury lines to its Basics merchandise.

Sales of the Basics range are 60 per cent higher than a year ago. Some products have shown spectacular increases: sales of Sainsbury's Basics salmon fillets almost trebled.

The grocer is pushing to increase its sales of non-food lines - an area where it has lagged behind Tesco and Asda. Its Tu clothing range is now the sixth-largest clothing brand in Britain by volume.

Sainsbury's

Sainsbury has had only a small store opening programme. In the quarter, it opened one supermarket and extended a further two. Two convenience stores were opened.

But it has just bought 24 outlets Sainsbury reckons that grocery inflation is around 3-4 per cent - far less than the 12.5 per cent reported in official figures earlier this week.

The company maintains that Government statistics are misleading because they are based on a small number of goods. And they don't take into account the impact of offers such as two-for-one deals.

On top of that, Justin King reckons that people are saving money by changing their shopping patterns: 'They might be buying chicken if its price has fallen, instead of beef whose price has risen.'

Sainsbury's strong performance eclipsed the 3.5 per cent rise in sales recently recorded by Tesco.

It has been concentrating its recent efforts on trying to fend off the threat of discounters such as Aldi, Netto and Lidl by launching budget lines at rock-bottom prices.

'Tesco has been fighting on price. It suits Sainsbury perfectly,' said one analyst yesterday. 'The Tesco guns are pointing the other way.'

Sainsbury shares had risen sharply ahead of the announcement, but fell yesterday by 7¼p to 323½p.

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