Empathy and ethics pay off

Mar 26 2009 by Peter McCusker, The Journal

SAINSBURY'S has seen a 6.2% rise in like-for-like sales excluding fuel in the 11 weeks to March 21. Chief executive Justin King described the better-than-expected sales growth as a resilient performance.

“We are seeing some significant changes in the mix of products customers are choosing to buy,” he said.

His comments underlined the current intense competition in the discount sector with Tesco, Morrisons and Asda all jostling for position against the likes of Aldi and Lidl as shoppers look to make savings.

Sainsbury’s also played up its ethical credentials after becoming the first major retailer to stop selling eggs laid by battery hens and increasing its range of higher welfare pork.

The chain also gained a sales boost from its support for charity Comic Relief, which added 0.3% to like-for-like sales over the quarter.

In the run-up to Red Nose Day two weeks ago, the supermarket attracted more than 19 million customers, its highest total outside Christmas period. The company said non-food sales had maintained strong growth, with its Tu clothing range now available in 290 stores. Its online home shopping service saw sales growth of more than 20% over the quarter.

Mr King expects the current economic environment to remain challenging, but said the supermarket was “well positioned to continue its good progress”.

Sainsbury’s has also expanded its store portfolio after agreeing to buy 24 stores from the Co-operative Group in an £83m deal this month.

Stockbroker Hargreaves Lansdown’s head of UK equities Richard Hunter said: “Following on from a record Christmas performance, Sainsbury’s continues to gauge the current mood of the consumer extremely well.

“The group’s middle-of-the-market positioning, allied with an ongoing and high profile advertising campaign, has borne fruit again.”

He said: “Another tailwind may well have been provided by the rise in inflation, where the rise in food prices has given some scope for slightly higher prices.”