Sainsbury's accelerating investment in technology as Q1 sales dip

Sainsbury’s reported top-line sales declines for its first quarter of trading across all its key categories.

In the 16 weeks to 29 June, grocery sales dropped by 0.5%, general merchandise sales declined by 3.1%, and clothing sales fell by 4.5%. Excluding fuel sales, it meant total retail sales were down 1.2% year-on-year and like-for-likes were 1.6% worse off than the same quarter in 2018.

CEO Mike Coupe, who has received criticism from analysts following the failure to deliver the proposed merger with Asda, said the business will continue to adapt to changing shopping habits as it looks to find growth.

"We will invest in 400 supermarkets this year, including adding an enhanced beauty offer in 100 stores,” he explained.

“We are accelerating investment in technology: 148 supermarkets now have SmartShop self-scan, 206 Argos stores offer Pay@Browse and we upgraded 29 more Argos stores to digital formats, all helping to make shopping with us quicker and easier.”

The SmartShop initiative allows shoppers to use their smartphones to scan items as they walk the aisles, and is designed to make the check out process simpler. Pay@Browse, which launched earlier this year, aims to help bust queues in Argos stores, by allowing customers to pay on the tablet devices used to search the retailer’s catalogue.

The technology investments come alongside Sainsbury’s move to reduce the price on over 1,000 every day food and grocery products, as it looks to gain market share in an increasingly competitive market.

Sainsbury’s reported in May that annual profit before tax for the year to 9 March dropped from £409 million to £239 million, due to costs associated with the failed Asda bid, restructuring, and defined benefit pension expenses of £118 million. Sales growth has been hard to come by in the wake of continued strong performance by Aldi and Lidl, as well as the resurgence of Tesco, Morrisons, and Co-op Food.

Sainsbury’s said that Argos Fast Track collection has grown by 20% and Fast Track delivery by 13% year-on-year in recent months, while 29 Argos stores have been upgraded to digital formats in the most recent trading quarter.

The retailer’s convenience and online channels continued to grow in the quarter, by 1.5% and 5.1% respectively.