Sainsbury’s is just about managing to hold its own

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The Independent Online

Sainsbury’s is another business facing up to disruptive competition. It reckons it can holds its own by dint of its, erm, “values”. 

Grocers are in the business of making money. And shoppers are in the business of saving it. And the only room for “values” in that equation might appear to be in the dreams of marketing and PR departments. 

But, with the sector gasping for breath in the face of a relentless assault from Aldi and Lidl, Sainsbury’s is clearly doing something right. 

The ominous looking clouds hanging over Tesco, Morrisons and Asda are of a softer, fluffier type when it comes to Sainsbury’s – that was evident in its latest trading statement, which did something that a traditional grocer hasn’t done for quite some time: it surprised on the upside. 

Let’s be clear here, Sainsbury’s little fluffy clouds are still casting some long shadows, even if an overexuberant stock market managed to ignore them by marking the shares up by more than 13 per cent. To provide a bit of context, last year was a tough one, and yet Sainsbury’s still managed to turn in a £681m pre-tax profit. 

This year analysts had pencilled in something closer to £550m. After the traders have finished their party, they may like to reflect on the fact that while the upgraded forecasts may end up looking something more like £570m to £580m, that still adds up to a nasty fall in earnings. Sainsbury’s sales from stores open at least a year also continue to decline.

But at a slower rate than rivals – and when you’re cutting prices you do very well to show any increase in sales as measured by the amount of cash going through the check-out. Which is why Sainsbury’s has been rather keen to point to the fact that its volumes, the number of products it shifts, are trending upwards. 

The explanation for all this might just be because the shoppers still quite like going to Sainsbury’s, even if they’ll also nip down to Lidl or Aldi for the baking, or the cycling offers, or for whatever weird and wonderful things the two of them have planned for their aisles of mad decisions in the middle of their shops. 

Sainsbury’s formula, with its spacious shops, reputation for quality and helpful staff, seems to be working, particularly at Christmas when people are inclined to treat themselves and trade up. Regardless of whether you put this down to values, or something more like strategy, it’s helping Sainsbury’s to hold its own while its rivals are doing anything but.

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