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Sainsbury’s chief sees discounter threat receding

| International retailers

After yesterday reporting Sainsbury’s first quarterly increase in underlying sales for over two years, the group’s Chief Executive suggested that the threat from Aldi and Lidl was diminishing and that they will struggle to maintain their rapid growth of recent years. .

According to Marketing magazine, Mike Coupe told delegates at Mumstock, a conference about marketing to mums, that the discounters were “increasingly looking like conventional supermarkets, with all of the attendant costs”. 

He went on to say that price gap between the big four supermarket multiples and Aldi and Lidl was narrowing. "The biggest barrier for us to overcome is the price difference between the discounters and the major supermarkets, although that’s come down a lot in the last couple of years,” he said. “And you’ve seen the growth of the discounters slow quite dramatically in the last year.” 

Coupe also knocked the discounter’s limited product ranges, suggesting shoppers wanted a wider range of goods. “The reason that even today the discounters only have 10% of the UK market is because many people shop a much, much larger portfolio of products,” he said. 

During its fourth quarter (nine weeks to 12 March), Sainsbury’s like-for-like sales edged up 0.1%, ahead of analysts’ forecasts of a slight fall and better than the 0.4% drop in its third quarter. Highlighting the group’s success in shifting the business away from multi-buy promotions towards everyday low pricing, Coupe said: “We have traded well this year and are making excellent progress implementing our strategy. The market will remain competitive but we are confident that we will continue to outperform our major peers.” 

He added: “We will match our competitors toe to toe and we have the financial capacity to do that. We will continue to invest in closing the price gap with the discounters on a selective basis.” 

Aldi and Lidl starting to look like 'conventional' supermarkets', but they are not...
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