Sainsbury is number two supermarket as Tesco row continues

By Michael Stones contact

- Last updated on GMT

Related tags: Asda, Wal-mart, Tesco, Justin king

Justin King: 'We are leading among the supermarket pack'
Justin King: 'We are leading among the supermarket pack'
Sainsbury has overtaken Asda to become the UK’s second biggest supermarket, as the row with market leader Tesco – over its price comparison policy – continues.

The retailer’s total sales – including VAT and fuel – rose by 4.4% to £13,953M for the 28 weeks to September 28 2013. Underlying profit before tax climbed by 7% to £400M, with return on capital employed up slightly at 11.4%.

Sainsbury boss Justin King acknowledged the retailer had overhauled Asda but claimed, on some measures, it was now the UK’s foremost supermarket.

“We are number two by some measures but the most important measure is what our customers think,”​ King told BBC Radio 4’s Today​ programme. “On pretty much every customer measure, we are leading among the supermarket pack.”

‘We are leading among the supermarket pack’

While King acknowledged the gulf is sales between Sainsbury and Tesco – “in terms of sales, it turns over twice as much as we do” ​– he added: “We are number one on most measures of service and availability. And that’s a great place to be and part of why our business is trading so strongly.”

In a statement accompanying its interim results, King said its share of the grocery market had reached its highest for a decade, at 16.8% following 35 consecutive quarters of like-for-like sales growth.

But despite improving news about the economy, supermarket shoppers remained hard pressed, he said. “Good economic news has not shown up in people’s pockets.

“Customers have got less money left over now than they have had for a very long time. Average price rises are still ahead of average wage rises – albeit that the latest news yesterday [November 12] is that inflation has come down again. So, at the end of the month, shoppers have less money left. That’s the reality of the market we we are trading in.”

Taking Tesco to court

Questioned about Sainsbury’s legal challenge to Tesco's price comparison claims, King said the retailer was taking Tesco to court on its price promise campaign because its research had shown more than 80% of customers think how a product is sourced is an important part of their decision to buy.

“They​ [Tesco] are not comparing like with like. Their assertion is that it does not matter to customers. They take the view that as long as the product has the same function, then it can be price compared.”

“In other words, we source our ham to high standards through farms in the UK and Tesco can compare that with their ham farmed to lower standards, somewhere undefined in Europe. We don’t think that’s a fair price comparison but, much more importantly, the vast majority of customers don’t think that’s a fair price comparison either.”

King is about to mark 10 years at the helm of Sainsbury.

 

Sainsbury results at a glance

 

•     Total sales (including VAT and fuel) up 4.4% to £13,953M.

•     Total sales (including VAT but not fuel) up 4%.

•     Like-for-like sales (including VAT but not fuel) up 1.4%.

•     Underlying profit before tax up 7% to £400M.

•     Underlying basic earnings per share up 9.2% to 16.6p.

•     Return on capital employed reaches 11.4%.

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