Strong Q1 for Sainsbury's as non-food drives growth

Sainsbury's has outperformed Tesco in Q1 of 2011 with l-f-l growth of 1.9%. This figure is 0.9% higher than its rival's comparable update (excl. fuel, incl. VAT). A strong value proposition attracted customers to the retailer's food offer, while non-food sales continue to provide growth.

A clear brand architecture has hit the right note with budget conscious shoppers, creating growth in all three tiers of own-branded ranges; basics, by Sainsbury's and Taste the Difference. The pressures on consumer spending are reflected by the strong growth for the basics range, which was the retailer's fastest growing brand. The Feed your Family for £50 campaign has also generated interest, with one million hits on the dedicated website translating into a 20% sales uplift for featured products.

Non-food continues to provide growth despite a challenging consumer environment and limited discretionary spending. While competitors are struggling to maintain growth, Sainsbury's has seen non-food sales growth outstrip that of food once more in this quarter, as it continues to enjoy late mover advantage in entering into new categories.

Multichannel opportunities are well targeted, as online grocery sales increased by 20% and roll-out of the Click & Collect service continues with an aim of reaching 800 stores by year end 2011. Convenience also remains a key growth driver for the retailer with l-f-l increase of 20% in this channel and continued expansion providing 13 new stores in the quarter.

Sainsbury's is proving successful in showing flexibility in range and promotions to suit a price sensitive, quality seeking consumer throughout a difficult trading period. The grocer's expansion plans provide strong avenues to growth in new categories and new geographical areas, demonstrating a real threat to rivals.

Source : Verdict Research