Sainsbury’s will gain if discounter roll-out slows says Credit Suisse


J Sainsbury PCL (LON:SBRY) has launched price cuts across more items in an attempt to halt the march of discounters Aldi and Lidl.

Having lowered prices on 250 items in February, another 60 staple products will be reduced this month.

Sainsbury’s said its Aldi price match campaign was already having an effect with good feedback from customers.

Sales in its last financial year jumped by 7.8% though the impressive sales run has not stopped speculation that it might next in the supermarket queue for a bid after offers for Morrisons and Asda.

A report last week also suggested that Aldi and Lidl’s plans to expand in the UK might be running two years behind schedule.

Lidl wants to open around 140 more new stores by 2023, whilst Aldi is targeting 280 by 2025.

Finding new areas that match their existing criteria might prove difficult for the discount chains, according to Credit Suisse.

The broker says the strategy is to open stores in urban areas with relatively high population density and near competitors to intensify pricing competition.

Tesco and Sainsbury will have the highest incremental exposure to new discounter competition, noted Credit Suisse, so a slower roll-out than anticipated will delay further market share losses for the pair.

Shares in Sainsbury rose 2.2% to 277.9p.


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