Sainsbury’s sales down in 'fierce' supermarket price war as Tesco accounts investigated

Grocer warns second half sales unlikely to improve as Tesco confirms it is being investigated by the FCA

Alex Lawson
Wednesday 01 October 2014 13:39 BST
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Sainsbury’s has reported a fall in second quarter sales as it battled “fierce” competition and plunging prices amid an intensifying supermarket price war.

The grocer today reported a 2.8 per cent fall in second quarter sales at stores open longer than a year and warned second half sales were unlikely to improve, following a 2.1 per cent fall in first half like-for-likes.

New boss Mike Coupe said a “dynamic and fiercely competitive” market typified by low prices and promotions had hit sales as well as customers shopping for fewer items more regularly.

Sainsbury’s reported its convenience business reached annualised sales of £2 billion and grew at around 17 per cent in the quarter. Groceries online grew by around 7 per cent, a slowdown as competitors promoted their online services.

Coupe said: “"The market remains dynamic and fiercely competitive. The long-running trend of more frequent, convenient shopping has accelerated, resulting in smaller basket sizes.

“An increase in price investment and short-term competitor promotional activity, combined with favourable commodity markets, has resulted in deflation in many areas of our food business.

He added: “In the second quarter, our performance has been impacted by the accelerated pace of change in the grocery market, including significant pricing activity and food price deflation in many areas.

"These conditions are likely to persist for the foreseeable future and we now expect our like-for-like sales in the second half of the year to be similar to the first half.”

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