Sainsbury's has released an upbeat third quarter trading statement with own brand and multichannel investments contributing strongly to Christmas trading.
Record build up to Christmas
LFL sales excluding fuel inc. VAT were up 0.9% while total sales were up by 3.3% for the 14 weeks to 5 January 2013. The week before Christmas was Sainsbury's strongest ever with 27m customer transactions, and the retailer recorded its best ever Christmas Eve sales of over £100m delivered with high levels of availability and customer service.
Outperformance in a slowing market
While the LFL figures represent a slowdown on the first two quarters (1.4% and 1.9% respectively), a tough comparative needs to be borne in mind. A year ago LFL sales grew by 2.1%, by far the strongest of the big four retailers and the market itself is growing more slowly. The latest Kantar data reveals 12 week growth of 3.2%, down from 5.1% for the same period last year.
Strong quarter for own brand
Investment in own brand underpinned Sainsbury's solid performance. Own brand sales grew at three time the rate of brands with over 3,000 new or improved products available this Christmas. The by Sainsbury's own brand delivered almost 5% growth, reflecting investment the retailer has made in improving the quality of its core mid tier own brand. Sales of own brand champagne and prosecco were a particular strength, up 15% year-on-year while Sainsbury's food ordering service attracted 25% more orders. Sainsbury's aims to complete the by Sainsbury's rollout by year end.
Nectar points help customer budgets stretch further
Besides turning to own brand to contain the cost of Christmas, many customers redeemed Nectar points to make their budgets stretch further with £110m of Nectar points redeemed during the quarter. Sainsbury's has indicated that it wants Nectar to play stronger role within its marketing strategy going forward and already the appeal of the scheme is being broadened through new competitions and promotions.
A multichannel Christmas
Online and convenience both contributed strongly to headline growth. Convenience grew by 17%, helped by the opening of 19 stores during the quarter and more customers taking advantage of click & collect which helped online sales to grow by more than 15%.
Customers respond to non-food investment
General merchandise was another highlight for Sainsbury's with sales growing faster than food. Clothing achieved growth of over 10%, cookware almost 19% and small electricals over 24% reflecting the inclusion of a stronger non-food offer at more stores and expansion online.
Outlook remains challenging
Commenting on expectations for 2013, CEO Justin King said: "We expect the challenging economic backdrop to persist, with customers looking to re-balance their household budget after the festivities and so spending cautiously in the first few months of 2013. By continuing to help our customers to Live Well for Less through our ongoing commitment to great food, Brand Match, competitive pricing and targeted promotions via Nectar and coupon-at-till we are positioned to perform well over the next quarter."
This month: Hear direct from Justin King and the senior team at the Sainsbury's trade briefing
The IGD Sainsbury's Trade Briefing takes place on 29 January. Don’t miss the opportunity to hear the retailer’s plans for your categories in 2013 and beyond…More