Despite the cost of living crisis, Sainsbury’s has managed to successfully solidify its presence in the UK grocery market by competing with the budget discounters while retaining its premium appeal.
The Nectar card loyalty scheme keeps customers coming back while offering similar prices to Lidl and Aldi. By offering lower prices exclusively to Nectar card holders it doesn’t damage Sainsbury’s brand and enables them to keep its premium image, and charge a premium for many lines.
This approach has also been adopted by Tesco highlighting the competitive nature of the grocery market currently.
That said, earlier this year, Sainsbury’s announced a plan to hone in on its grocery strategy. Early progress and further detail will be of much interest as full-year results when they are released on Thursday, 25th April.
“Investors will be keen to see if there is more flesh on the bones on Sainsbury’s three-year strategy unveiled in February which is aimed at offering more food options and consistent value for shoppers. The plan was a little scant on detail, and while the direction of travel, with a doubling down on groceries, is the right way to go, a more in-depth road map would be welcomed to explain how it will be achieved,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Competition is super tough in the supermarket space, particularly for a mid-market name like Sainsbury’s with cost-of-living pressures meaning it needs to have an ever-sharper eye on offering value. Although it’s succeeded in seizing more market share, that’s put pressure on margins and investors will want to see how long this is likely to continue for.
“Retreating more from home wares and replacing shelf space with more grocery ranges is a big part of the plan, as the grocer takes advantage of customers who are willing to spend more on at home treats. The Taste the Difference range has seen encouraging increases in sales, and investors will want to see that momentum continuing.”
