Discounters to break Sainsbury"s three-year run of booming sales

By

Rupert Steiner

|

Falling sales: Sainsbury’s is expected to feel the impact of the low-cost chains

The retail world will be turned on its head this week as the discounters finally break Sainsbury’s three-year run of sales growth while annual profits at Next will overtake Marks Spencer’s for the first time.

The stark impact of the low-cost chains on established grocery and fashion players will be laid bare in fresh trading updates.

Sainsbury’s has been the last of the Big Four supermarkets to feel the full force of the discounters, having been insulated by its range of own-brand products and its successful Live Well For Less promotion.

But analysts are predicting a fall of 3 per cent in underlying sales compared to this time last year when it was up 3.6 per cent due to the timing of Mother’s Day and its sponsorship of Comic Relief pulling in more shoppers.

This will also be well down on the 0.2 per cent growth seen in Sainsbury’s Christmas update.

The sharp reversal of fortune will be a personal disappointment for chief executive Justin King, who will hand over his crown to commercial director Mike Coupe in July and wanted to leave on a high.

All of the grocers have been suffering from fierce competition wrought by the increased dominance of Aldi and Lidl.

Last week Morrisons issued its second profit warning of the year but sent a shiver down the High Street with plans to start a price war with an investment of £1billion in discounting products.

Clive Black, an analyst at Shore Capital, said: ‘Sainsbury’s is expected to report a dull fourth-quarter performance, albeit considerably better than Morrisons and Tesco. To be fair to the company, it is up against a tough comparative.’

Apart from the discounters, supermarkets are suffering from an easing of inflation, shoppers wasting less food, and a shift to buying smaller, more frequent baskets of food.

Its three main rivals have recently announced plans to take an axe to prices.

Upbeat: Annual profits at Next are expected to overtake Marks Spencer’s for the first time

Kantar Worldpanel research figures for the past four weeks reportedly show Sainsbury’s sales fell 0.7 per cent, down from growth of 2.2 per cent in the overall 12-week period.

At clothing retailer Next, the decision to hold firm and resist pre-Christmas discounting looks likely to have pushed profits past those of rival Marks Spencer for the first time since it was founded in 1982.

MS and a raft of High Street clothing retailers, including Debenhams, caved in to hefty pre-Christmas discounting, which hurt profit margins.

Next has said it went into the January sales with 11.5 per cent less stock to sell after a strong festive period.

It expects to earn between £684million and £700million in its full-year underlying pre-tax profits, topping the £628million forecast for MS.

Comments (17)

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ME,

bolton, United Kingdom,

8 hours ago

My theory is that because people are working less hours and therefore getting less pay, they have more time to shop around. Once the economy picks up and people start working longer hours for more pay they return to the big 4 if only for convenience. The last thing you want to do is spend all of your spare time going to different shops for different groceries.

HD,

Bournemouth Dorset,

9 hours ago

I’ve got to say I went into lidl today and yeah they are cheap however the claim the quality is the same is not entirely true especially when you compare them to waitrose and Sainsburys.

They don’t stock a huge range which will also bring your final bill down. They have made a reasonable effort at a bakery offering but the stores are cluttered and the service was nothing short of shocking (maybe a bad day)!

It will be a sad day if they do force the demise of certain BRITISH supermarkets and force OUR money overseas through the profits they make.

davidr,

Newark, United Kingdom,

13 hours ago

We need a larger Aldi to cope with all the extra customers; When our local Aldi opened a few years ago we were often the only shoppers; How things have changed !

Iknowitall,

bournemouth, United Kingdom,

15 hours ago

Sad to see Justin King go, he was one of the good leaders of a team that respected its suppliers.

Odessa,

london, United Kingdom,

16 hours ago

Aldi Lidl @ 4 or 5 times more expensive than Sainsburys ????? Your guesses are madness.

Otherwise Sainsburys would get their stock from the German stores and make 500% profit !!

Paul,

London, United Kingdom,

12 hours ago

Sainsbury is not that much more tha Aldi!!

richard.parkinson,

birmingham, United Kingdom,

18 hours ago

Anybody who has ever been to Aldi will know that their basket of goods will be cheaper than the big 4. You also know where everything is, and there are no multi buy offers as such. Even going through the checkout is quick. Once you try Aldi I doubt you will ever go back.

David,

Herts,

16 hours ago

Not in my one. The queues are one of a few gripes that have put me off. And their not the cheapest either.

dazb,

surrey,

15 hours ago

To aldi again or the big 4 supermarkets?

Dave,

Lincoln,

20 hours ago

Presumably when all these people shopping at aldi and lidl drive the last UK supermarket out of business, they will then all be whinging about how Germany took over our food supply chain. You disgust me.

coconav,

Londoin, United Kingdom,

14 hours ago

Yeah…may as well pay more for inferior goods then. That sounds like a plan!

retired-not-required,

Newcastle,

22 hours ago

So Justin King jumped ship just at the right time. Sainsburys will never be able to match the prices at Aldi. No doubt they will continue with their repetitive sales promotions on TU, wine and petrol to lure punters in to the stores…. Too late, once you’ve tried Aldi there’s no turning back

RJimmer,

Dorchester, United Kingdom,

20 hours ago

I went into Aldi yesterday and it was heaving, every checkout was busy.

David,

Herts,

16 hours ago

Aldi can’t deliver goods to my door though can they?

chris,

York, United Kingdom,

1 day ago

Of course no one shops at MS any more.

Mr Patient,

Newcastle, United Kingdom,

1 day ago

We’ve heard “price war” from supermarkets a million times and they don’t amount to a hill of beans. Aldi and Lidl have kicked their backsides and they will never match them for price and quality. And M and S is a dinosaur, everything is over priced. try Waitrose for quality food.

Paul,

London, United Kingdom,

21 hours ago

Aldi Lidl have great prices and quality, so why pay 4 or 5 times the price at Waitrose. Sainsbury has the largest Fairtrade sales in the world !!

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Discounters to break Sainsbury"s three-year run of booming sales