Sainsbury is pinning the next stage of its recovery on growing non food and will use its two new international direct sourcing units to slash prices.
Chief executive Justin King also said he was exploring in-store ordering of white goods, such as washing machines, to complement its online delivery services for kitchen appliances.
Sainsbury’s new buying operations in Poland and Hong Kong, which opened two weeks ago, had enabled it to cut out the middle man, thus reducing costs that could in turn be passed on to consumers. “We need to give non food more space. When food is where it needs to be, we’ll start extending stores for non food again.”
Reporting on Sainsbury’s interim results, King revealed that the supermarket was now achieving 15 million weekly transactions. Despite half-year profit before tax being up almost 130% to £87m from a loss last year of £292m, underlying profit before exceptionals was flat, up 0.9% to £118m. That was against sales up 5.6% to £8.8bn, and up 2.1% in Easter-adjusted like-for-likes, excluding petrol.
“The market has been tougher than expected. But in terms of supermarkets we’re ahead of the curve, growing faster than the market,” said King. He added that Sainsbury had reached “market matching” availability, but wanted to go further, using a review of its depot network to cut travel costs and adding 200 extra night shifts in stores to improve availability.
He was upbeat about Christmas, claiming that while last year the supermarket had been trading existing stock, this year it had bought in a specific range. “This time last year we were talking about protecting Christmas,” said King.
“The product is fantastic, our prices are sharpened and our stores are in a better position than they’ve ever been.”
Rachel Barnes