Covid-19: Sainsbury's and Argos report bumper Q1 online

Sainsbury’s has reported double digit sales growth year-on-year in grocery for the 16 weeks to 27 June, with group online sales – including its Argos division – more than doubling.

Online grocery sales jumped by 87% year-on-year, supported by an increase in orders fulfilled per week from around 370,000 to over 650,000. Nearly 50% of new online grocery customers during the period were new Sainsbury’s shoppers.

While all 573 Argos standalone stores were closed for the majority of the quarter, due to government-enforced closures related to the Covid-19 pandemic, sales still jumped by 10.7% – with home delivery sales up by 78% and click & collect rising by 53%.

The retail group said its performance during the coronavirus-impacted period highlighted the “strength and flexibility of the digital and technology platforms we have built”.

Sainsbury’s also said its SmartShop tool, which allows customers scan their own groceries and use a separate checkout in store, reached 37% of sales on average and exceeded 50% in some of its shops.

Overall grocery sales increased by 10.5% year-on-year, while general merchandise sales including Argos grew by 7.2%. However clothing sales dropped by 26.7% and petrol sales were down significantly as consumers limited their travel during the period.

Total retail sales excluding fuel were up by 8.5% year-on-year, and by 8.2% on a like-for-like basis.

Simon Roberts, who assumed the CEO role from Mike Coupe last month, commented: “Our business has changed fundamentally from four months ago.

“We have more than doubled our weekly sales of online groceries in recent weeks, SmartShop now accounts for more than half of sales in some supermarkets and Argos sales were strong while operating as an online-only business for almost 12 weeks.”

He added: “The coming weeks and months will continue to be challenging for our customers and our colleagues and we do not expect the current strong sales growth to continue. A number of the decisions we have made have materially increased costs but meant that we have done the right thing for our customers and set us up well for the future.”

The group said the cost of Covid-19 in terms of diminishing the group's bottom line is expected to be more than £500 million, as Sainsbury’s added operational costs through online investments, in-store safety measures, and the expansion of its workforce. But the retailer said this loss will be broadly offset by business rates relief and stronger grocery sales experienced during the period.

Among the other new initiatives Sainsbury’s embarked upon during the coronavirus lockdown period was the expansion of its one-hour grocery delivery service Chop Chop, which is now available beyond London and is in 15 cities.