Sainsbury's pledges to extend price matching scheme

 

Supermarket giant Sainsbury's pledged to extend its price matching scheme today as it revealed better-than-expected sales in the run-up to Christmas.

The third biggest grocer in the UK saw like-for-like sales excluding fuel grow 2.1% in the 14 weeks to January 7, with customer transactions in the week before Christmas increasing by 1.5 million to a record 26 million.

The group said its Brand Match scheme - a guarantee that if an identical basket of branded goods could be bought more cheaply in Asda or Tesco, a coupon will be given at the till for the difference - was a hit and will continue into 2012.

Sainsbury's, which opened its 1,000th store in the period, said revenues were driven by strong food sales, including £2 million of Taste the Difference turkeys, but general merchandise sales again grew at a faster rate than food.

The update comes after market research figures revealed Sainsbury's achieved its highest share of the market since March 2003 with 16.7%, while bigger rival Tesco lost share.

Tesco, the UK's biggest supermarket chain, triggered a price war in September with its Big Price Drop campaign and prompted Sainsbury's to introduce its Brand Match scheme and Asda to offer a guarantee to be 10% cheaper than rivals.

But there are fears that Tesco's campaign has failed to strike a chord with customers because it is funded by a reduction in Clubcard points and promotions.

Sainsbury's said its Taste the Difference range grew by 10% in the quarter, while its Basics range grew strongly, driven by “staple” ingredients.

The supermarket said a record number of customers used their Nectar cards, with £100 million-worth of points redeemed.

General merchandise and clothing sales were boosted by the second range from celebrity fashion consultant Gok Wan, launched in November.

The chain's drive to increase its portfolio of convenience stores continued in the quarter, with an additional 21 stores opened.

Chief executive Justin King said: “Consistent with trends over the past year, we expect customers to spend cautiously in 2012, particularly in the first few months as they tighten their belts post-Christmas.”

Sainsbury's shares were nearly 1% higher after the update.

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