Sainsbury's customer

Source: Sainsbury’s

Sainsbury’s said it was inflating at a lower rate than the rest of the market

Sainsbury’s CEO Simon Roberts said he was not “overly optimistic” about Christmas trade as the supermarket faced cost of living pressures, potential turkey shortages and World Cup disruption.

Roberts said he expected customers to shop early and “spread out the cost of Christmas”, as well as reduce basket spend whilst prioritising the areas where they want to spend.

“We’re clearly seeing customers wanting to spread out the cost of Christmas, shopping earlier where they can, and buying little and often as they plan for Christmas,” he said, adding customers were “putting fewer items in their baskets”.

His comments came shortly after the UK’s second largest supermarket reported an increase in grocery sales of 0.2% in the 28 weeks to 17 September, after stronger growth in the second quarter of 3.8% as lockdown comparatives eased and price inflation accelerated.

However, profits were hit by a large investment in price amid soaring inflation, which drove costs across labour wages, energy and fuel, and overall store operations.

Roberts said Sainsbury’s was hoping to bank in on the eating-at-home trend that was “likely to continue” – it is launching 300 new products in time for the seasonal peak period, with roughly half of them being Taste the Difference lines.

The chief executive said his team was “watching closely” the recent bird flu developments that have seen farmers across the country warn of Christmas turkey shortages, but that Sainsbury’s was well prepared for potential disruptions.

“We’ve become accustomed and planful about how we deal with supply chain challenges, in fact last year there was quite a significant concern going into Christmas about the shortage of workers and CO2 in the poultry industry, and in the final few days we had plenty of turkeys for everyone with great support from our suppliers.

“The good news is that frozen turkeys are already cold and frozen and about one-third of our turkey volume comes through that route. We’ve ordered more turkeys overall this year than we sold last year so we have a buffer overall in our plan.

“That being said, avian flu is a serious issue and one that we’re watching very closely and we’re not complacent about this issue at all.”

While turkeys are a “key part” of the Christmas offer, Sainsbury’s is also focusing on other protein alternatives including gammon, beef, and plant-based options. Its Christmas range this year includes 18 new plant-based products such as meat alternative centrepieces.

“We’re doing everything we can to have the best choice to serve everyone,” Roberts said.

Sainsbury’s and fellow UK retailers are also preparing for the upcoming World Cup, which is set to bump sales of booze and snacks and cause further disruptions to the traditional golden quarter period.

The grocer’s CEO admitted that the timing of the World Cup was “interesting”, but added that the business was preparing “offers and deals on the products that people are likely to be interested in” as it expected customers to gather at home to watch the matches.

“These conditions are so unprecedented, we’ve not had a World Cup just before Christmas and, as far as I can remember, we’ve not been in a situation with such a challenging time for millions of households. So all we can do is make sure we’re doing everything possible to help customers manage their budgets.”

Despite the upcoming World Cup trade peak and supply chain worries, Roberts said he expected people to look for “reasons to have a good time” and that availability in the run-up to the festivities was “substantially better than last year”.