Sainsbury’s has said it will not be adding own-label products to its Brand Match price comparison scheme despite Tesco including private label in its new programme.
Speaking on a conference call following the release of the retailer’s fourth-quarter sales figures this morning (19 March), chief executive Justin King said Sainsbury’s had no plans to change its Brand Match scheme despite the launch last week of Tesco’s Price Promise, which covers both branded and own-label products.
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“Our customers tell us they understand Brand Match very clearly for what it is, which is a promise on brands, which of course are the same wherever they’re sold. We believe it to be the leading price promise in the market and it’s clear and straightforward.
“Of course, once you include own label there are significant challenges on what is truly comparative and we would say that most of our own label is not comparable to that sold by our competitors. We sell much more high-end [products]. We are a quarter of all Fairtrade sales in the UK, we have long-standing commitments for chicken to be British, and of course all of our fish is MSC certified.”
King said Sainsbury’s intends to “stick with price comparison on brands” because, he said, “that’s what works”.
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“Our customers tell us these things make our own label higher quality and therefore price comparing to them with products that are not as good and not as greater provenance is not a fair comparison.”
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By GlobalDataThe scheme launched by Tesco compares the overall cost of a basket of groceries and matches the prices against the same or equivalent products from Asda, Morrisons and Sainsbury’s. It automatically issues a coupon for the difference at the till or by email if the basket would have been cheaper elsewhere.
Asked whether Sainsbury might consider extending its Brand Match scheme online, King replied: “It is just in store. We’re always looking at that side of things but for now we think that in-store, in supermarkets is the right place to do it.”
The retailer this morning recorded an increase in like-for-like sales over the last ten weeks, helped by strong growth in online and convenience.
Sainsbury’s said it managed to deliver “strong” like-for-like sales growth of 3.6%, excluding fuel, in the period to 16 March. The increase in sales came amid 18% growth year-on-year from its convenience stores.
King dismissed a suggestion the retailer had “saturated” the London convenience market due to the high number of stores it has opened there to date.
“I’m not sure off the top of my head what proportion of the total we’ve opened are inside the M25 but I imagine it’s probably somewhere between at third and a half. But we see convenience stores as having relevance throughout the whole country. I was looking at the sales figures this morning for one of the stores we opened last week in Sheffield and the store is performing fantastically well so it is absolutely a national opportunity.”
King, however, admitted that the density of population in London meant there would be a higher concentration in this city.
“One of the things we’ve learnt over the last ten years is that the clue is in the name. They need to be very conveniently located, so you will see them in areas of high population density. You will also see stores no more than a mile to half a mile apart because the vast majority of sales from convenience stores come from within half a mile from that store and they are on foot. [They will open] all over the country but I would guess in the year ahead, more than a third will be inside the M25 but all over the country.”
CFO John Rogers added: “We certainly don’t see the market within the M25 as saturated at all. In fact, we still see an opportunity to add more convenience stores within the M25.”
Conlumino analyst Joseph Robinson said the strong performance of Sainsbury’s online grocery and convenience businesses serves to both underline that these channels are representing the pre-eminent drivers of growth across the sector and the grocer’s continued success in taking advantage of these trends.
He added: “This is a highly impressive performance from Sainsbury’s, particularly considering the exceptionally difficult competitive backdrop and strong comparatives.”
Sainsbury’s share price was up 1.82% to 371.83 pence at 12:48 GMT.
