British supermarket Sainsbury’s revealed a slowdown in sales growth today despite efforts to tempt cost-conscious shoppers into its stores with cut-price promotions and a bigger value range.
The retail giant said its Jamie Oliver-fronted “Feed your family for a fiver” campaign was driving strong sales growth of its “basics” products as consumers sought cheaper food in the face of the credit crunch and soaring inflation.
However, first quarter like-for-like sales growth slowed to 3.4%, down from 4.1% in the previous quarter and below the 5.1% seen this time last year.
Rising food inflation also accounted for the bulk of the sales hike in the 12 weeks to June 14, with volumes “just above flat” as prices rose around 3% across its stores, according to the group.
Rocketing fuel costs also drove total like-for-like sales, including petrol, up by 7.3% in the first quarter, although Sainsbury’s said volumes also increased as it offered competitive prices to embattled motorists.
Chief executive Justin King agreed with the Bank of England’s grim inflation forecast yesterday that prices will rise for six to 12 months, but said the group was “fighting hard for consumers”.
Shares in the chain fell 2% as the sales figures marginally missed the 3.5% expected in the market and lagged behind recent results from rivals.
Tesco posted a 3.5% increase in comparable first quarter sales earlier this month, while Morrisons reported a 7% increase.