Sainsbury’s has bucked the downward trend in the UK grocery market to book its thirty-fourth consecutive quarter of like-for-like sales growth thanks to a strong performance from its top- and mid-tier own label lines.

The company today (12 June) reported first quarter like-for-like sales growth of 0.8%, excluding fuel. The group emphasised that gains meant it was the only one of the country’s five largest grocers to gain market share during the period. Sainsbury’s share of total grocery sales rose 0.2% to 16.8%, the company said.

Speaking during a conference call following the results, chief executive Justin King added that the company is also winning sales from branded manufacturers, with whom the company competes through its private label lines.

Sainsbury’s private label lines account for approximately half of sales. Taste the Difference sales were up 10% and the recently re-launched By Sainsbury’s line was up almost 7%, meaning that “everything else we sell was roughly flat”, King revealed.

In particular, King said the group’s top-tier private label offering, Taste the Difference, was picking up sales as consumers continued to seek savings on their weekly shop. “Taste the Difference is first place most consumers go when they leave a brand and most consumers see that as trading up, because of the quality,” King claimed.

“Own label is a key part of our positioning. Own label competes with brands,” King said. “Taste the Difference is targeted to be as good as or better than the leading brands – it is somewhere that customers go when they want to save some money but not compromise on quality.”

At the same time, Sainsbury’s Basics line – which remained flat during the period – allows the group to fend off competition from the discounters, King suggested. “What we have is an offer that delivers universal appeal… if you are very driven by discounts, grams per penny, you can come and buy Basics… because we happily stand basics up against any discounter… and of course you get our values with that.”

Conlumino analyst Joseph Robinson concurred that this broad-based appeal continued to serve Sainsbury’s well in the first quarter of the year. “Investment in its well balanced brand proposition continues to have strong traction among hard-pressed British consumers in a polarised market,” he suggested.

“Sainsbury’s is getting a number of things very right. Most notable has been investment into own-label architecture, which has afforded it authority to flex its offer in accordance to broadening consumer demands and capabilities,” Robinson observed. 

Another factor driving the growth of Saisbury’s own label brands was its decision to offer fewer promotions on branded products over the last 12 weeks, the Sainsbury’s chief executive revealed. “We are slightly less promotional because we have been driving own label sales over the last 12 weeks,” King said. “But on every own label sale consumers save 20- 25%.”

The price differential between branded and private label, which King put at around 20-25%, meant that the group does not make a higher margin on private label products, because savings are “passed on to consumers”. However, King emphasised that Sainsbury’s strong private label offering is one of the primary reasons why it has been able to continue to grow sales in a market marked by lower volumes.

“We think our success over the last five years… is because we have never been shy of helping our consumers spend less money,” King commented. “The key way that customers can achieve savings is by remaining loyal to our own label.”