Yahoo Finance Sainsbury’s escalates Aldi price war amid ‘challenging’ year for shoppers
The head of Sainsbury’s has warned that households face a “challenging” year as the supermarket escalated a grocery price war by promising to keep food bills as low as possible.
The UK’s second-largest supermarket pledged a renewed focus on value as it relaunched its Aldi price match campaign to include more fresh products across fish, meat and poultry.
The chief executive, Simon Roberts, said Sainsbury’s will strive to offer the best value amid cost of living squeeze crisis.
“Delivering great value for customers is at the heart of our strategy and we’ve sharpened our price positioning against our key competitors. The environment is a really challenging one, so it’s important to support them," he said.
“Our focus is that we will ensure we mitigate inflation as far as we possibly can, as we bring our focus on food, as we make savings in our business to reinvest in the value of our food offer, and as we work with our suppliers. It’s clear that the market has some inflation and this year will be challenging.”
His remarks come after Aldi and Lidl vowed to undercut all supermarket competitors on prices this year.
Sainsbury’s claimed it matches Aldi on 260 prices, of which 150 are fresh produce that shoppers buy most often.
In December, it offered the same price on key Christmas dinner items such as turkey crowns at £6.89 a kilo and a 1.4kg gammon joint at £5.70 to attract more customers to its stores.
Meanwhile, it has 2,000 lines in its Price Lock promise, which keeps prices frozen for eight weeks.
William Woods, an analyst at Bernstein, said: “Sainsbury’s is walking the tightrope of reducing prices to be more competitive whilst also passing on inflation.
“Sainsbury’s appears to be strong relative to peers but they have not passed on as much inflation. Trying to narrow the pricing gap to the discounters in 2022 will be hard as inflation will start to bite.”
Sainsbury’s said annual profits would be £60m higher than predicted following better than expected food and sales over the festive period, boosted by record sales of champagne.
The grocer posted a 0.8pc increase in grocery sales in the six weeks to Jan 8 compared with a year earlier as looser restrictions allowed families to socialise more freely.
However, total sales fell 2.4pc as its general merchandise division, which includes Argos sales, was hit by global supply chain disruption affecting electronics, toys and games. Like-for-like sales, excluding fuel, dropped by 4.5pc in the 16 weeks to Jan 8.
Mr Roberts said: “We couldn’t get the availability we wanted, but it got a bit better towards Christmas. I wouldn’t call this [supply chain disruption] as being over, we expect it to continue, but we expect improvements.”
Zoe Mills, retail analyst at GlobalData, said: “While Sainsbury’s focus in its food proposition during the pandemic has been apt as consumers face rising prices elsewhere, more attention must be given to its non-food proposition this year.”
Sainsbury’s now expects to make underlying profits of £720m for the year, up from previous estimates of £660m.
Shares closed 3.3pc higher at 288.4p.
Separately, JD Sports, which also upgraded profits after a surge in demand for athleisure and trainers, vowed to keep a lid on prices in the face of rising inflation across the economy.
Peter Cowgill, executive chairman, said: “We will price our goods in accordance with prices that we are charged by suppliers and that varies, but we have no intention of profiteering from inflation.”
The group said "positive" recent sales demand means it is now expecting to post pre-tax profit of at least £875m for the year to January 29, upgrading its previous target of £810m.
Sales in the 22 weeks to January 1 were up 10pc on the same period in 2020, the company said.
