J Sainsbury, noted for its imperious attitude before Tesco toppled from its throne as leader of Britain's supermarket sector in the mid-90s, is in serious danger of relegation to number three slot, it was revealed Wednesday.
The chain is continuing to lose market share to Tesco and current number three operator Asda (now owned by Wal-Mart of the US), reports researcher Taylor Nelson Sofres.
Sainsbury’s decline flies in the face of its current massive TV campaign fronted by bloke-ish celeb chef Jamie Oliver (not perhaps the ideal role model for the chain’s predominantly hausfrau customer base). Nor has its immersion in the new national loyalty program Nectar helped stem the defection of customers.
Seemingly defying the TNS data, Sainsbury announced its half-year results on Wednesday, with pre-tax profits before exceptionals up by nearly 11% to £342 million ($539.25m; €537.52m) on sales marginally increased (+1.6%) to £9.7 billion.
But the implications of the latest market share data are not lost on the City of London entrail-rakers. Opines one: “This isn't good news for Sainsbury. The TNS data shows there hasn't been a miracle from Nectar. Sainsbury's is still losing out to Tesco and Asda. Any time now, Asda will take over the number two spot from Sainsbury's – and it could happen by Christmas.”
Sainsbury ceo Sir Peter Davis – who returned to the firm at the start of 2000 after an absence of four years – does not deny the likelihood of displacement by Asda and was surprisingly sanguine about that possibility: “One day it will happen, or might happen. Asda is growing fast.”
He added: “There's no doubt that market growth has slowed. It's getting tougher. Asda, Tesco, Waitrose and Morrison’s are all running well. And I would include Sainsbury in that.”
Some observers believe that Sir Peter is no longer obsessed with market share, instead preferring the old-fashioned notion of enhanced margins.
As to the possible extension of Sainsbury’s recent joint venture with pharmacy, health and beauty chain Boots, Sir Peter declined to comment, observing that the venture still waits on a ruling from the Office of Fair Trading.
Data sourced from: Telegraph.co.uk; additional content by WARC staff