However, its progress was overshadowed by the banking crisis as one of the grocer’s more colourful stakeholders – billionaire property tycoon Robert Tchenguiz – was forced to sell his 10 per cent stake.
The news led to a drop in Sainsbury’s shares and all eyes turned back to the banking crisis. We should not overlook the grocer’s performance, though. Sainsbury’s like-for-likes for the second quarter, excluding petrol, were up 4.3 per cent. This pits the grocer comfortably above Tesco’s 4 per cent like-for-like rise – albeit over a slightly different period – and dramatically ahead of Marks & Spencer, which said food sales in the past three months were down 5.9 per cent.
Sainsbury’s boss Justin King claimed he is pinching customers from the likes of Marks & Spencer and Waitrose, along with restaurants, and managing not to lose out to the lower-priced grocers by being price-competitive.
There are some doubters – some believe Sainsbury’s market share is being eroded and others think this trading momentum can’t be sustained. One analyst believes Sainsbury’s has been more promotional across the first half than some of its competitors and come Christmas, will get left behind when Tesco, Asda and Morrisons step up their game.
Others however, believe the results shows how much Sainsbury’s has improved its offer and price perception. In King’s words, the results “demonstrate that what we have been doing over the last four years has borne fruit”.
In the shadow of the banking crisis, it is unfair not to give Sainsbury’s some credit. If it truly is gaining customers from the top end and stopping them dropping out of the other end, then it stands on good ground.
Sainsbury’s upmarket Taste the Difference line is still growing, in marked contrast to Tesco, which last week said its Finest range has stopped growing. And sales of its Basics range is up about 30 per cent for the quarter.
King pointed out that Sainsbury’s has changed in line with its customers’ needs. He says that he has given customers the opportunity to save money and ramped up its Basics line to top 550 products.
In this climate, Sainsbury’s is doing the right thing. It needs to keep its top-end products such as free-range chickens front of mind for the customers coming from Marks & Spencer and Waitrose, yet doesn’t want to lose any shoppers to its competitors and even the discounters.
Good news is hard to come by in the banking furore, so King and his team should be applauded.
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