Sainsbury's sales rise as credit crunch customers turn to own-brand products

Sainsbury's touted its discount grocer credentials yesterday, as it delivered booming sales of own-label value lines and won over customers from the upmarket grocers Marks & Spencer and Waitrose during the credit crunch.

Justin King, the supermarket's chief executive, said: "We have successfully developed our offer to help offset the rising cost of living and tighter household budgets."

His comments came as Sainsbury's delivered an 11.2 per cent uplift in pre-tax profits to £258m for the 28-week to 4 October. Its like-for-like sales jumped by 3.9 per cent, excluding fuel, over the period.

Mr King declined to provide sales data for the period since 4 October, but pointed to Tuesday's TNS Worldpanel data, which said that Sainsbury's had grown sales by 6 per cent for the 12 weeks to 4 November. Over the same period, Morrisons increased sales by 9.4 per cent, Asda by 9 per cent and Tesco by 5.4 per cent.

The engine rooms of Sainsbury's growth over the period were its Basics value lines, other own-brands products and non-food. Sainsbury's said that sales of its Basics lines were growing at 40 per cent a year. Mr King was keen to stress that while 60 per cent of its customers buy Basics, 51 per cent purchase Basics and its Taste the difference premium range. The grocer has boosted sales with its "Switch and Save" campaign, which launched in September and encourages shoppers to switch to its own brands.

Mr King said that Sainsbury's was not only hanging on to its existing customers, but also attracting new ones, particularly from M&S and Waitrose. "You can see precisely why those type of retailers are struggling," said Mr King. The grocer's total sales over the half-year rose by 7.6 per cent to £10.8bn.

Sainsbury's is also seeing an increase in sales of its food takeaway boxes, as customers cook at home rather than going to restaurants or dialling in takeaways.

Gwyn Burr, the grocer's customer director, said "There is an increasing trend to people eating at home rather than eating out. The average price of a takeaway is £17."

Sainsbury's said that about 30 per cent of its offer was now on promotion compared to 25 per cent this time last year. An upbeat Mr King said that Sainsbury's would not be making any job cuts in head office and would be hiring the same number of temporary staff in the lead up to, and over, the crucial Christmas holiday period, in contrast to many other retailers which have been taking an axe to their cost base. He said: "We are not cutting capital expenditure."

Reflecting its confidence, Sainsbury's said it would open 30 convenience stores, Sainsbury's Local, this financial year, but would increase that to 50 in 2009/10 and then to 100 in 2010/11.