J Sainsbury PLC (LSE:SBRY) will issue its trading statement for the first quarter of 2022-23 next Tuesday, 5 July, hoping that its investment in competitive pricing will have paid off.
Amid weak consumer confidence and high levels of inflation, the UK’s leading supermarkets are in a race to compete on price in order to sustain market share.
Sainsbury’s, which opened its newest Sainsbury's Local store in County Durham this week, said in its statement for the year through to March that it would invest in lowering the prices of 150 of its bestselling fresh products to compete on price.
In April, the grocer forecast that the year ahead would be hampered by “external pressures and uncertainties”, guiding for an underlying profit before tax of between £630mln and £690mln.
“We know just how much everyone is feeling the impact of inflation, which is why we are so determined to keep delivering the best value for customers,” Sainsbury’s chief executive Simon Roberts said in the supermarket's annual report.
“We have been able to drive more investment into lowering food prices funded by our comprehensive cost-savings plans."
Industry pressure
Tesco PLC (LSE:TSCO) reported last month that its UK sales had fallen 1.5% in the first quarter to £9.88bn due to the "unprecedented increases in the costs of living".
The market-leading supermarket is also investing heavily in price matching to stave off competition from discount retailers such as Lidl and Aldi, with Aldi recently named cheapest supermarket of 2021 by Which? and revealing last month that it is targeting 55 new locations to open stores.
The German-owned discounter has its sights directly on Morrisons, which also released a second-quarter trading update in the past week, hoping to overtake the supermarket to become the fourth-largest grocer in the country.
Morrisons said in its Wednesday trading update that like-for-like grocery sales fell 6.4% for the 13 weeks ending 1 May, excluding petrol at the pump.
Including fuel, Morrisons’ revenue was up 2.6% at £4.6bn after the price of petrol surged following Russia’s invasion of Ukraine.
For the 13 weeks of trading through to 30 January 2022, Morrisons generated £4.56bn of revenue, up from £4.5bn for the equivalent period a year earlier.
The trading statement modelled for scenarios such as cost inflation headwinds and a loss of wholesaler relationships.
David Potts, Morrisons’ chief executive, said in its annual report for 2021 to 2022 that the retailer was working on investing in its pricing and range to drive future growth.