Sainsbury Sales Slowdown Blamed on Axed Air Miles Promo

25 July 2002

Britain's second largest supermarket group, J Sainsbury, blamed a dramatic slowing in sales growth on its decision at the end of last year to axe its Air Miles loyalty programme – immediately and gratefully snapped-up by rival (and number one) grocery chain Tesco.

Following the dumping of Air Miles, first quarter sales growth year-on-year slid from 8.6% to 3.6%. Mitigates group ceo Sir Peter Davis: “We have experienced a short-term impact from our decision to terminate the Air Miles contract, which we estimate affected our like-for-like growth in the quarter by around 1%.”

Sainsbury has an historic antipathy to continuity loyalty programmes (having famously scorned the now ubiquitous retail loyalty card as “nothing more than electronic trading stamps”) but nevertheless plans this autumn to join Barclaycard, BP and Debenhams in Nectar – a joint loyalty card scheme devised and run by Air Miles founder, Keith Mills [WAMN: 05-Jun-02].

This, Davis believes, will help boost H2 sales: “We remain confident that the launch of the enhanced Nectar loyalty card this autumn will prove attractive to customers. Taking this into account and the phasing of our reinvigorate programme, we expect to achieve a stronger second-half performance.”

Data sourced from: BrandRepublic (UK); additional content by WARC staff