What is it about Sainsbury's?

Another impressive performance.

As expected Sainsbury’s has notched up another impressive performance across its full financial year, with LFL sales up by 1.8 per cent and profit growth in line with City expectations.  

A key driver of this success has been the development of Sainsbury’s own-label architecture, which has afforded it the ability to flex its offer to fragmenting consumer demand which has seen the simultaneous growth of both the value and premium ends of the food market. Its Basics and Taste the Difference sub-brands address the polar ends of the market well, while the re-launch of its mid-tier By Sainsbury’s sub-brand has appealed to shoppers seeking price competitive alternatives to branded products. 

This balanced positioning has been complemented by targeted discounting, that encourages loyalty without widespread damage to margins. Sainsbury’s has notably achieved this through its Brand Match and leveraging its Nectar card programme for sales promotions. Moreover, while Tesco’s Price Promise offers a functional threat to footfall, "value-for-money" is at the heart of the Sainsbury’s DNA, as part of its Live Well for Less push. This is evident in creative campaigns such as "Feed Your Family For A Fiver", that have served to strengthen value credentials.

Taken together, the well segmented range and the targeted promotional activity is insulating Sainsbury’s in a climate where consumer loyalty is fickle and hard discounters are excelling.

Supporting these brand developments has been a store strategy which is suited to emerging market dynamics.  Sainsbury’s has traditionally had less of a focus on hypermarket formats compared to Asda and Tesco and has thus not been as impacted by the more negative performance of these store types. Instead its convenience-led strategy has paid dividends, with sales growing 17 per cent across this format, following the opening of a further 87 convenience stores during the year.

Wider afield, Sainsbury’s is also reaping the rewards for investments in its supply chain and procurement systems. Its close relationships with farmers, which has included an investment of £40 m in Farmer Development Groups since 2006, has ensured it has traceability and integrity. This helped Sainsbury’s avoid being engulfed in the horsemeat scandal, as many of its competitions were. 

Sainsbury’s also has a compelling growth story to tell in other areas of its business. Annual online grocery sales are now approaching £1billion, growing nearly 20 per cent over the year. Elsewhere, its non-food offer is relatively immature compared to its supermarket competitors; its general merchandise and clothing sales continue to grow at more than twice the rate of food, offering future scope for growth. In addition, with the announcement that the it is acquiring Lloyds Banking Group’s 50 per cent shareholding in Sainsbury’s Bank, Sainsbury’s has further opportunities to further leverage its brand loyalty at a time when consumers still lack confidence in core financial institutions.

On the horizon, Sainsbury’s does face both immediate and longer term challenges. Strong comparatives will undoubtedly provide a challenge, particularly considering the wider economic backdrop. Tesco’s resurgence is also a threat, as its own investment programme in own brand, store strategy and price competitiveness gathers pace. More pertinently, rumours of chief executive Justin King’s departure,  have caused some uncertainty among investors. That said for now at least, its proactive approach to evolving shopping trends leaves it ideally placed to make further market share gains.

Photograph: Getty Images

 Managing Director of Conlumino

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Will Jeremy Corbyn stand down if Labour loses the general election?

Defeat at the polls might not be the end of Corbyn’s leadership.

The latest polls suggest that Labour is headed for heavy defeat in the June general election. Usually a general election loss would be the trigger for a leader to quit: Michael Foot, Gordon Brown and Ed Miliband all stood down after their first defeat, although Neil Kinnock saw out two losses before resigning in 1992.

It’s possible, if unlikely, that Corbyn could become prime minister. If that prospect doesn’t materialise, however, the question is: will Corbyn follow the majority of his predecessors and resign, or will he hang on in office?

Will Corbyn stand down? The rules

There is no formal process for the parliamentary Labour party to oust its leader, as it discovered in the 2016 leadership challenge. Even after a majority of his MPs had voted no confidence in him, Corbyn stayed on, ultimately winning his second leadership contest after it was decided that the current leader should be automatically included on the ballot.

This year’s conference will vote on to reform the leadership selection process that would make it easier for a left-wing candidate to get on the ballot (nicknamed the “McDonnell amendment” by centrists): Corbyn could be waiting for this motion to pass before he resigns.

Will Corbyn stand down? The membership

Corbyn’s support in the membership is still strong. Without an equally compelling candidate to put before the party, Corbyn’s opponents in the PLP are unlikely to initiate another leadership battle they’re likely to lose.

That said, a general election loss could change that. Polling from March suggests that half of Labour members wanted Corbyn to stand down either immediately or before the general election.

Will Corbyn stand down? The rumours

Sources close to Corbyn have said that he might not stand down, even if he leads Labour to a crushing defeat this June. They mention Kinnock’s survival after the 1987 general election as a precedent (although at the 1987 election, Labour did gain seats).

Will Corbyn stand down? The verdict

Given his struggles to manage his own MPs and the example of other leaders, it would be remarkable if Corbyn did not stand down should Labour lose the general election. However, staying on after a vote of no-confidence in 2016 was also remarkable, and the mooted changes to the leadership election process give him a reason to hold on until September in order to secure a left-wing succession.

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