RetailAnalysis
11 January 2017
Sainsbury's delivers upbeat Christmas trading

Sainsbury's has reported encouraging results for the festive period with retail LFL sales turning positive for the first time in three quarters in its core business and strong growth from Argos.

Record Christmas week lifts Sainsbury's

The UK's second largest grocer achieved ex-fuel retail LFL growth of +0.1% in the 15 weeks to January 7th, a marked improvement on Q2's -1.1% result, and its first quarter of positive LFL growth since Q4 2015/16. The outcome was lifted by a record Christmas week when 30m customer transactions took place. Total volume growth was positive across all channels (though LFL volumes were flat).

Continuing focus on quality and value

Central to Sainsbury's strategy is its distinctive approach to investing in quality and value. Range investments meant that this Christmas 25% of Sainsbury's brand food was new or improved compared to two years ago, and sales of the Taste the Difference party range were up 50% year-on-year. At the same time the price of a typical basket was down 14% on two years ago as Sainsbury's has used savings from its ending of multi-buys to fund lower base prices. 

Strong growth from Argos

The newly acquired Argos business performed particularly strongly with LFL sales up 4.0% and total sales up +4.1%, reflecting strong trading through both the Christmas and Black Friday periods, especially across technology categories. The group also benefited from the opening of Argos digital stores at a growing number of Sainsbury's supermarkets which provided a convenient one stop solution for festive shoppers.

Online growth accelerates

Online growth at Sainsbury's picked up to over 9%, a welcome response to recent investments in its click & collect rollout programme and extra capacity in London, supported by a strong operational performance. This result was achieved without heavy vouchering activity to acquire new customers, and with uptake of its Delivery Pass increasing. Online, particularly the Fast Track delivery proposition, was also a crucial ingredient to Argos's trading, with online sales up 13% to account for 57% of its total.

Continuing growth in convenience

Sainsbury's convenience business grew by 6%, in line with the result from H1. This growth was largely driven by new space, including six new trial stores through the Eurogarages partnership, though like-for-likes were also positive, lifted by recent launch of its 'On the go' food-for-now concept. 

Sainsbury's Trade Briefing 2017: Booking has now opened for Sainsbury's biggest supplier event of the year, on June 13th. It's your chance to hear direct from CEO Mike Coupe and the leadership team about Sainsbury's strategic vision and grow your business with the retailer. For more details and to secure your place, click here.

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