Sainsbury’s CEO Justin King today (17 June) admitted that the UK retailer needed to “work harder” to convince shoppers it can offer value on branded products.
Go deeper with GlobalData
Earlier today, the UK’s third-largest grocer reported a 7.8% rise in like-for-like sales during its first quarter.
A factor in Sainsbury’s recent growth has been the growing popularity of its own-label Basics range and sales jumped 50% year-on-year during the quarter.
However, the retailer is keen to prove it can offer value on brands and recently launched a campaign emphasising its moves to cut 7,000 prices since the start of the year.
King said consumers were recognising that Sainsbury’s offers good value but acknowledged that the retailer needed to go further.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“We’re confident that our price position is, not just the best it has ever been, but also that we are getting more credit for it with customers as they shop around,” King told analysts.
“The primary investment [in Sainsbury’s advertising] is focused on brands and making sure we are bang on the money in terms of our branded pricing,” King said. “It’s where our customers still have the least confidence in our pricing position, so it’s where we need to work hardest to gain that trust and confidence.”
Earlier today, Sainsbury’s also announced plans to launch a GBP445m (US$725.4m) fund-raising programme to accelerate its expansion in the UK.
Sainsbury’s planned to place a tranche of new ordinary shares in the company to raise around GBP255m of the funding, as well as issue convertible bonds due 2014.
This afternoon, the company hailed a “successful” equity raising and said the move had raised around GBP242m.
Sainsbury’s is looking to grow its floor space by 15% – or 2.5m sq ft – by March 2011.
CFO Darren Shapland said Sainsbury’s plans demonstrated its ambition to accelerate its growth in the UK.
“In context that’s more space in two years than we’ve added in the last five – so a big kick-start to our plans,” Shapland said.
The retailer also announced that it had bought nine stores – six supermarkets and three convenience stores – from UK peer The Co-operative Group for GBP29m.
Sainsbury’s shares were down 5.5% at 313.50 at 16:24 BST.
