Is Sainsbury’s pricing strategy working ? 2nd Quarter Trading Figures Up 0.3%     

Finally there has been some good news for Sainsbury’s, The supermarket recently released its 2nd quarter trading figures which showed a 0.3% increase in total retail sales which it attributes partly to its pricing strategy.

Last September, Sainsbury’s decided to make a number of big changes after feeling the effects of food deflation, and after facing tough competition from discount supermarkets. To combat its sales woes it’s implemented a range of initiatives including “tactical pricing”.

Price is often a concern of shoppers when it comes to making purchasing decisions and as a result, retailers have had to deploy a number of smart pricing strategies in order to compete effectively in the marketplace. Supermarkets looking to deal with the price sensitivity of consumers and the competitive threats of aggressive discounters face a tough challenge.

For Sainsbury’s, tactical pricing is nowhere near as glamorous as hiring Jamie Oliver to star in TV adverts but the company’s new pricing strategy seems to be having a positive effect.

As part of the strategy, Sainsbury’s has reduced its promotional activity in favour of lower regular prices. Chief Executive, Mike Coupe, explained that by reducing the price of its products, Sainsbury’s has competed better with other cheaper supermarkets and in turn has seen volume and transactions increase across its stores.

Mike Coupe continued:

“Our customers are telling us that we are communicating our prices and promotions more clearly which, in combination with the price reductions we have made, has seen an increase in price satisfaction scores.”

With these initiatives, combined with cost savings, the supermarket now expects its full year profits to be ‘moderately’ ahead of the forecasts.

Takeaways

  • Supermarkets looking to deal with the price sensitivity of consumers and the competitive threats of aggressive discounters, face a tough challenge. Their problem right now, is that on the whole, UK consumers believe that the discount supermarkets are much cheaper than the big players and Aldi and Lidl are doing a great job of driving this perception.
  • Perception or reality, right now it’s all about price, followed by convenience and choice, with quality being a given.
  • Supermarkets need to ensure they are price competitive and do a better job of communicating it to their customers.

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