In a trading statement brought forward from next Wednesday, Sainsbury’s has revealed strong trading performance over the festive season.
- Christmas period (9 weeks to 2 January 2021) +9.3% LFL
- Q3 period (15 weeks to 2 January 2021) +8.6% LFL
- Total ex fuel sales grew +6.6%, pulled down by the closure of many standalone Argos stores
- Grocery sales +7.4%, with groceries online +128%
- General merchandise +6.0%, with Argos +8.4% and clothing +0.4%. Full price sales were strong with many Christmas lines selling out
- Total digital sales (across Argos, Habitat and Sainsbury’s) rose 81% to 44% of total sales
- Profit expectations upgraded to reflect stronger sales and margin performance to at least £330m (after forgoing business rates relief)
- Smaller gatherings: more smaller turkeys and more lamb and beef sold
- Shoppers treated themselves: Taste the Difference sales + 11%, premium champagne +52%, party food strong throughout December
- Shifts in product demand: Mincemeat sales up 24% as customers baked at home more and record numbers of steaks sold in the run-up to New Year’s Eve
- A 10x points Nectar point promotion on the Monday and Tuesday of the Christmas week helped to pull demand forward, easing pressure on stores and enabling social distancing
Delivering against the new food first strategy
Basket sizes increased during the quarter as customers bought more of their shopping from Sainsbury’s, with the retailer also reporting improvements to key customer service metrics and availability. Lower prices proved a draw with the extension of the Price Lock campaign to cover 2,500 lines. Innovation was also important to the Christmas campaign with Sainsbury’s committed to bringing new products to market faster.
Surge in online sales
Grocery online sales jumped 128% in Q3 with online participation rising to 18%, double the rate of a year earlier. Of the 18%, 15% was delivered and 3% Click & Collect, though Click & Collect’s share built to 24% in the Christmas week as shoppers unable to secure home deliveries switched to the channel. With elevated levels of online participation expected to remain, Sainsbury’s has been working to improve online productivity and profitability. Orders per van are up 56% and pick rates have now recovered to pre-pandemic levels.
Outlook for 2021
Sainsbury’s is confident about further opportunities to improve its offer, focusing more on improving the value it offers and concentrating more on innovation. While not perfect the Brexit deal will allow it to address these issues with limited disruption to the business. Beside a continuing investment online, expect Sainsbury’s to focus more on developing its new neighbourhood hub store format to ensure it effectively serves local shopper needs.