Sainsbury’s profits from horsemeat scandal

Sainsbury’s profits from horsemeat scandal

A good reputation comes by foot and leaves by horse. That is what several big British retailers discovered during the scandal about horsemeat that was labelled as beef. The exception is Sainsbury’s, that emerged from this crisis unscathed. The chain profited from the higher trust consumers put in its private labels.

Christmas: flop, Easter: top

Sainsbury’s announces it made 23 million transactions per week in the fourth quarter of its financial year, which ended on 16 March. That is a record for the third largest food-retailer in Great-Britain.

 

It also means a boost after a disappointing third quarter, where identical sales growth was a meagre 0.9 percent: the worst performance of Sainsbury’s since 2005 and extra disappointing as the important Christmas-period during that third quarter.

 

In the meantime it is almost Easter and Sainsbury’s can revel in more promising results for the fourth quarter, where identical growth rose by no less than 3.6 percent (over the entire year the identical sales growth is 1.8 percent). The strongly improved quarterly performance is a consequence of more Brits finding their way to Sainsbury’s since the outbreak of the horsemeat scandal.

 

Trust in private labels

Sainsbury’s also makes this connection, be it in different words: “All of our fresh beef is sourced from the UK and Ireland and we have routinely carried out DNA testing on our products for over ten years," says the report. “The issues experienced by the industry over the last quarter underscore the importance of our detailed understanding of our supply chain."

 

The growing amount of customers and the continued trust also benefit the sales of Sainsbury’s's private labels. That is good news for the margin: “With the re-launch of the by Sainsbury’s range almost complete, sales have grown by around 9 percent year-on-year”, says Sainsbury’s. “Our differentiated own-brand offer is complemented by the price reassurance of Brand Match on branded products."

 

Multi-channel successful

In the fourth quarter total sales of Sainsbury’s rose by 6.3 percent (on a yearly basis total sales rose by 4.3 percent). In these period it also opened three supermarkets and nineteen convenience stores. Over the entire year Sainsbury’s opened fourteen new supermarkets (and closed two) and the number of convenience stores grew by 83 (87 opened and four closed).

 

The convenience stores of Sainsbury’s have an annual sales growth of 18 percent. To facilitate this strong growth, Sainsbury’s recently opened a new distribution centre in Thameside that is completely focused on the growing convenience business in London and the South-East of England.

 

That the multi-channel approach is successful, show the online sales that rose by 20 percent in the past fiscal year. Sainsbury’s now services 190,000 online customers per week. Non-food is even growing three times as fast as food. Especially in clothing (+20%) and home appliances (+25%) Sainsbury’s had an impressive sales growth.

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