Sainsbury's customers switching to own-brand products

By Tom Espiner
Business reporter, BBC News

Shoppers carrying Sainsbury's bagImage source, Getty Images

Sainsbury's customers are switching to own-brand products and cutting back on non-essential spending as prices rise more quickly, the supermarket's boss has said.

Simon Roberts added that pressure on household budgets is set to increase over the rest of the year.

Households have been struggling with the cost of living as energy, food and fuel bills soar.

Mr Roberts said Sainsbury's was "doing everything we can to keep prices low".

Some customers are "switching into economy own-label" when food shopping, while Sainsbury's is seeing customers "pulling back" some spending on general merchandise, Mr Roberts said, with larger "big ticket" items "more challenged".

Sainsbury's sales fell 4% in the 16 weeks to 25 June compared with last year, but that difference was mainly down to how lockdowns in 2021 had pushed up sales, he said.

Sales at Argos were also down, in part due to the squeeze on household budgets, chief financial officer Kevin O'Byrne said.

Last month, a BBC-commissioned survey suggested that people were cutting back on food, fuel and clothes as prices rise.

And nearly half of adults in an Office for National Statistics (ONS) survey in June said they had bought less food in the past fortnight due to higher prices.

The price of food was also the most common reason for why those asked were seeing their monthly outgoings rising overall, the ONS said.

Supermarkets Asda and Tesco have also previously said that customers were cutting back on shopping.

Announcing Sainsbury's latest trading update, Mr Roberts said: "We really understand how hard it is for millions of households right now and that's why we are investing £500m and doing everything we can to keep our prices low, especially on the products customers buy most often."

"The pressure on household budgets will only intensify over the remainder of the year and I am very clear that doing the right thing for our customers and colleagues will remain at the very top of our agenda," he added.

Pay pressure

Sainsbury's suppliers are also under pressure as commodities such as fuel and fertiliser prices rise, in part due to the war in Ukraine, Mr Roberts said.

The supermarket chain was working "very closely" with suppliers "to focus on how we navigate" these price rises, he said.

He said it was a matter of balancing "keeping prices low for customers but also keeping products in stock".

The supermarket has also been under pressure from campaign group Shareaction over paying the Living Wage of £9.90 per hour not only to its own staff, but also to contractors such as cleaners and security guards.

Mr Roberts said Sainsbury's pays colleagues "as fully as we can".

The cost of living is rising at its highest rate for 40 years, and the Bank of England has warned prices could rise faster within months.

Despite its latest comments, Sainsbury's said it still expected full year underlying profit before tax to be in line its previous estimate of between £630m and £690m.

The researchers also found shoppers are switching from branded items to supermarkets' own-label products.

To try to ease the burden on households, retailers and other businesses have been under pressure from the government to cut prices.

But small firms have said the plans are a "slap in the face" saying they had "already cut all expenses, even necessary ones, to the bone."