Planet Retail sees the latest quarterly like-for-like declines at Sainsbury’s as a sign the company is beginning to feel the pain of Tesco’s domestic recovery. With little or no growth available in the market, one company’s gains can only be achieved at the expense of another. This is, after all, a truly cut-throat business.
On Sainsbury’s Q1 results, David Gray, Retail Analyst at Planet Retail, commented: “Once more, Sainsbury’s has turned in a subdued set of quarterly like-for-like numbers as the onset of market deflation hits company performance hard. Although the convenience business continues ticking along nicely, the core big-box arm is suffering steep declines in like-for-like sales, meaning that, in a relatively short timeframe, Sainsbury’s has stumbled from being one of the best-performing UK grocers to one of the lesser lights.
“Sainsbury’s appears particularly vulnerable to retail titan Tesco’s domestic recovery, which is inexorably picking up steam. Should Tesco sustain the numbers achieved at Q4 (-1 percent LFL), Sainsbury’s may well have even further to fall. With practically zero growth to be had in the UK grocery market, Tesco’s gains may well be Sainsbury’s losses.
“Even so, the picture is not all unremitting gloom. Convenience continues to deliver solid growth, as does the online grocery operation. Sainsbury’s is also taking decisive measures to adapt its hypermarket format to the changing retailing landscape through repurposing or sub-letting space, tying up with footfall-generators like Argos and so on. While perhaps not a cure-all, these moves at least indicate management’s willingness to confront pain-points in the business. Such proactive measures will hopefully go some way to easing the company’s pain.”
Source: Planet Retail
