It was announced on Wednesday that Sainsbury’s like-for-like retail sales (excluding fuel) dropped by 0.8 per cent in the first quarter of 2016. Sainsbury’s CEO, Mike Coupe, blamed the drop on food price deflation that will result in the market remaining competitive for the foreseeable future. Despite the reported drop in sales, Sainsbury’s share price opened two per cent higher at the start of trading on Wednesday, this increase can largely be attributed to the 0.8 per cent drop beating analyst’s predictions of a 1.7 per cent drop. In light of continuing pressure from the German discounters Lidl and Aldi, Sainsbury’s has recently begun to shift its pricing strategy away from promotional items and instead to focus of cutting the prices of everyday products. This decision was defended by Mr Coupe as a method of simplifying shopper’s experience as according to Coupe customers should not require a maths degree to shop.
In other Sainsbury’s news, it has been announced that the supermarket’s proposed acquisition of Argos owner Home Retail Group will be subject to scrutiny from the Competition and Markets Authority. Whilst Coupe remains calm that the investigation will progress no further than an initial probe if the investigation were to continue past the preliminary stage it could provide a major delay or even complete roadblock to the deal that was hoped to conclude in the third quarter of 2016.