Independent retailers have dismissed news that Sainsbury’s is looking to boost footfall in its convenience stores with competitive pricing, as a retail expert warns that supermarkets are becoming “increasingly aggressive” and boosting activity in the convenience market.
The major supermarket is extending Aldi price matching to 200 products in all its Local convenience stores.
Abdul Arain, of Al-Amin Stores in Cambridge, is based near a Sainsbury’s Local, and said that “as long as the price matching applies to core products, it only impacts us slight – but not much”.
“Our biggest sellers are not core products, like bread, so we will not be threatened if the price match is applied to those kind of items,” he said. “We always understood power of multiples, and when Sainsbury’s ventured into convenience we understood it could mean our demise. It’s the consequence of their buying power being so immense, and it’s not unexpected.”
While there are reports that Sainsbury’s has made the move to boost footfall in the smaller branches, Arain said the move is to “combat” the fact that the major supermarket “has been losing market share”.
“The details are still sketchy, as it’s just been revealed. We’ll need to know the exact products this will be applied to, and how much they’re intending to boost their market share. Who is being squeezed, manufacturers or producers, etcetera.”
Sainsbury’s is the first major grocer to extend its Aldi price match campaign across its convenience stores.
Maqsood Akhtar, owner of ambassador store Blackthorn Newsagents in Rotherham, said the news has no impact on his store.
Sainsbury’s Local format grows by 10.5%
“Sainsbury’s Local being nearby doesn’t even impact us – if you’re a store that knows what you do, you run it properly and you treat customers properly, you shouldn’t need to worry about competitive pricing,” he said. “I concentrate on myself, and what I should be doing, because I’m strong in my branding.”
The news comes as other major grocers, including Waitrose, Morrisons and Asda, announce intentions to open more convenience stores themselves.
Ananda Roy, senior vice-president at Circana and retail expert, told Better Retailing that supermarkets are increasing activity in the convenience sector to increase shopper frequency of trips, having already “been able to maximise value per consumer shopping trip, despite the cost-of-living crisis”.
“These frequency issues mean supermarkets are moving into residential areas and office areas with small format stores. Also, every supermarket is paranoid about discounters Aldi and Lidl moving into their territory. With the economies of scale [being] poorer in a convenience store, they have been charging a premium. But consumers are saying, ‘why am I having to pay more in convenience than in supermarkets?’. The supermarkets have no choice but to offer a price match for a small range of products.”
The BBC shared that, according to consumer analysis company, based on an analysis of 29 everyday products, shoppers are currently paying an average of 10% more for the same item in convenience stores than main supermarkets.
Roy added: “I think the cards are stacked against independents, but the independents are raising their voices with the local councils around things like business rates, and working with retailing associations to make sure, in the government, there is an understanding that high streets will close if [major supermarkets] move in.”
Sainsbury’s will not disclose how much its new initiative will cost, according to the BBC, and its Nectar loyalty price scheme will still only be in supermarkets and not convenience stores.
Sainsbury’s H1 results
Sainsbury’s half-year report for the 28 weeks ending 14 September 2024 has revealed that its convenience sector saw 4.9% growth for the period, more than half of the growth it achieved (10.5%) in the 28 weeks to 16 September 2023.
However, the major grocer has announced plans to open approximately 25 new convenience stores for the full 2024/25 year, despite only having opened six in in H1, between March and September, and having closed two Local branches.
As of H1 2024, Sainsbury’s has 838 active convenience stores in the UK.
The results also announced that the supermarket’s convenience estate has been ‘transformed’ in recent weeks, ‘accelerating plans to address a clear opportunity to better serve our customers’: in two weeks, it has ‘rebalanced space’ and optimised range by introducing more than 600 new products.
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