Sainsbury's results look weak at first glance, but are actually pretty strong

Total sales increased 3.3 per cent.

Sainsbury’s has announced that, during the 12 weeks to 08 June 2013,  total sales (inc. VAT ex fuel) increased 3.3 per cent, with LFLs up 0.8 per cent.  While representing the grocer’s weakest LFL performance in over three years, when put into context this is another strong update from Sainsbury’s. LFL growth has been delivered against tough comparatives – with the same period in 2012 coinciding with the Jubilee – and, more importantly, against wider market trends, with the grocer continuing to outperform key rivals: Morrisons and Tesco. Investment in its well balanced brand proposition continues to have strong traction among hard-pressed British consumers in a polarised market.

Sainsbury’s is getting a number of things very right. Most notable has been investment into own-label architecture, which has afforded it authority to flex its offer in accordance to broadening consumer demands and capabilities. Indeed, both its premium Taste the Difference and mid-tier by Sainsbury’s sub-brands achieved strong growth during this period. This private label investment has been complemented strongly by clever, targeted promotional activity, with its Brand Match scheme being supported by more creative campaigns such as ‘Feed Your Family’ and targeted promotions such through Nectar and via coupon-at-till.  Collectively, this well-aligned own label and promotional activity is somewhat insulating Sainsbury’s in a climate where consumer loyalty is fickle and the hard discounters are excelling.

At the same time, Sainsbury’s continues to display pro-activity in capitalising on opportunities specific to the business and wider trends in the grocery market.  A focus on convenience and online, as well boosting sales in the short term is leaving the business strongly positioned for the next decade. Elsewhere, its non-food offer is relatively immature compared to its supermarket competitors; sales here continue to grow at more than twice the rate of food, highlighting the future scope for growth here.

When viewed in context, despite more subdued LFL growth, this performance can only be seen as providing further evidence in favour of Sainsburys’ current strategic focuses. While Morrisons and Tesco are both investing heavily to turn around their fortunes, the real short-term threat to Sainsbury’s will continue to come from the discounters at one end and Waitrose at the other. In response, it is important that Sainsbury’s continues to be proactive in widening its appeal, strongly leveraging private label and investing in creative promotional investment. 

Photograph: Getty Images

 Managing Director of Conlumino

Photo:Getty
Show Hide image

Why isn't Labour putting forward Corbynite candidates?

Despite his successes as a candidate, the organisational victories have gone the way of Corbyn's opponents. 

The contest changes, but the result remains the same: Jeremy Corbyn’s preferred candidate defeated in a parliamentary selection. Afzhal Khan is Labour’s candidate in the Manchester Gorton by-election and the overwhelming favourite to be the seat’s next MP.

Although Khan, an MEP, was one of  the minority of Labour’s European MPs to dissent from a letter from the European parliamentary Labour party calling for Jeremy Corbyn to go in the summer of 2016, he backed Andy Burnham and Tom Watson in 2015, and it is widely believed, fairly or unfairly, that Khan had, as one local activist put it, “the brains to know which way the wind was blowing” rather than being a pukka Corbynite.

For the leader’s office, it was a double defeat;  their preferred candidate, Sam Wheeler, was kept off the longlist, when the party’s Corbynsceptics allied with the party’s BAME leadership to draw up an all ethnic minority shortlist, and Yasmine Dar, their back-up option, was narrowly defeated by Khan among members in Manchester Gorton.

But even when the leadership has got its preferred candidate to the contest, they have been defeated. That even happened in Copeland, where the shortlist was drawn up by Corbynites and designed to advantage Rachel Holliday, the leader’s office preferred candidate.

Why does the Labour left keep losing? Supporters combination of bad luck and bad decisions for the defeat.

In Oldham West, where Michael Meacher, a committed supporter of Jeremy Corbyn’s, was succeeded by Jim McMahon, who voted for Liz Kendall, McMahon was seen to be so far ahead that they had no credible chance of stopping him. Rosena Allin-Khan was a near-perfect candidate to hold the seat of Tooting: a doctor at the local hospital, the seat’s largest employer, with links to both the Polish and Pakistani communities that make up the seat’s biggest minority blocs.  Gillian Troughton, who won the Copeland selection, is a respected local councillor.

But the leadership has also made bad decisions, some claim.  The failure to get a candidate in Manchester Gorton was particularly egregious, as one trade unionist puts it: “We all knew that Gerald was not going to make it [until 2020], they had a local boy with good connections to the trade unions, that contest should have been theirs for the taking”. Instead, they lost control of the selection panel because Jeremy Corbyn missed an NEC meeting – the NEC is hung at present as the Corbynsceptics sacrificed their majority of one to retain the chair – and with it their best chance of taking the seat.

Others close to the leadership point out that for the first year of Corbyn’s leadership, the leader’s office was more preoccupied with the struggle for survival than it was with getting more of its people in. Decisions in by-elections were taken on the hop and often in a way that led to problems later down the line. It made sense to keep Mo Azam, from the party’s left, off the shortlist in Oldham West when Labour MPs were worried for their own seats and about the Ukip effect if Labour selected a minority candidate. But that enraged the party’s minority politicians and led directly to the all-ethnic-minority shortlist in Manchester Gorton.

They also point out that the party's councillor base, from where many candidates are drawn, is still largely Corbynsceptic, though they hope that this will change in the next round of local government selections. (Councillors must go through a reselection process at every election.)

But the biggest shift has very little to do with the Labour leadership. The big victories for the Labour left in internal battles under Ed Miliband were the result of Unite and the GMB working together. Now they are, for various reasons, at odds and the GMB has proven significantly better at working shortlists and campaigning for its members to become MPs.  That helps Corbynsceptics. “The reason why so many of the unions supported Jeremy the first time,” one senior Corbynite argues, “Is they wanted to move the Labour party a little bit to the left. They didn’t want a socialist transformation of the Labour party. And actually if you look at the people getting selected they are not Corbynites, but they are not Blairites either, and that’s what the unions wanted.”

Regardless of why, it means that, two years into Corbyn’s leadership, the Labour left finds itself smaller in parliament than it was at the beginning.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.