Sainsbury’s has “zero complacency” on food inflation, according to CEO Simon Roberts, who has insisted the grocer is doing everything it can to bring prices down, despite widespread accusations the sector is profiteering from the cost of living crisis.
Sainsbury’s grocery sales grew 11% during the first quarter of the financial year, with the supermarket crediting recent hot weather, as well as big events such as the coronation of King Charles in June as helping to drive the boost.
Last week, senior figures from the traditional big four were scrutinised by members of the Business & Trade Committee in what was the latest of a series of grillings by MPs, government figures and regulators over concerns supermarkets are not doing enough to bring down food prices.
Roberts said that while Sainsbury’s was “concerned” by the perception that grocers were profiteering from the cost of living crisis, the headline rate of food inflation did not reflect the experience in Sainsbury’s stores, which he said continued to inflate behind its key competitors.
The rate of food inflation across Sainsbury’s lines was “less than half” the headline rate of the market, Roberts added. He did not give an exact figure.
“All our energy is about battling food inflation,” Roberts said. “As the input prices come down. We’re passing those savings on to customers.”
Sainsbury’s has been among a number of major mults to cut the price of milk, bread and butter over the past few months. Last week that was followed by a cut in the price of cupboard staples including pasta and rice as the wholesale cost of commodities like wheat have started to fall.
Much of the recent price falls had been focused predominantly on fresh foods, Roberts said, while the price of packaged goods would take a bit longer to fall thanks to energy and labour costs.
Sainsbury’s had been able to pass on price cuts by absorbing inflation, and through a combination of efficiency savings across its supply chain and store footprint, Roberts said. This included the closure of Argos standalone stores, as well as the consolidation of its delivery partner network last year. As part of the grocer’s food first strategy, he said that any cost savings from elsewhere in the business were put into lowering prices. Sainsbury’s announced a further further £60m into keeping prices low in March.
However, while he expected food inflation to continue to fall, food prices were unlikely to return to pre-Ukraine war levels as a result of heightened labour costs, which were now fixed into the operating model, Roberts said.
While he insisted supermarkets could not take the blame for food inflation, he said he did not think suppliers should face more scrutiny from regulators over cost price increases.
“I don’t think there’s any value in blaming each other for inflation. We’re all in this together. We all want to see inflation come down. The grocery sector is working incredibly hard to give customers the best value that we can.
“Everyone is under a lot of pressure and it’s our job to battle grocery inflation on behalf of customers, and on less than 3% margins that’s exactly what we are doing,” Roberts said.
Nectar prices have also contributed to strong grocery sales
Alongside a boost from seasonal events, Roberts also credited the launch of its Nectar Prices scheme, and consolidation of its own brand value ranges under the single Stamford Street label with helping to improve grocery sales.
Nectar Prices, which is Sainsbury’s equivalent to Tesco’s Clubcard Prices, has led to a million new customers joining its Nectar scheme since the launch in April. The promotion now sits across 10% of all Sainsbury’s range, Roberts said.
Supermarkets have also come under scrutiny regarding fuel prices. On Monday the CMA published the results of its year-long probe into supermarket’s approach to fuel pricing. Sainsbury’s was among the supermarkets to be found to have not lowered prices as fast as they could have.
The regulator recommended the establishment of a fuel finder scheme that would enable customers to search for the cheapest price at the pumps.
Roberts said Sainsbury’s would welcome increased transparency over fuel pricing. “It will really benefit customers to be able to see everyone’s pricing in real time.
Roberts said Sainsbury’s did not set a margin target and never had when it came to fuel, instead setting price based on competitors in locations.
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