Sainsburys Chief Predicts Own Brand Christmas

Posted on 19 November, 2012 by Kirsten Kennedy

Christmas is in the air, with eager shoppers rushing out to buy everything needed for the big day. Presents, decorations and festive foods line the aisles of supermarkets nationwide – but rather than a White Christmas, many are gearing up for the biggest Bargain Christmas seen in quite some time. Because, although the recession is officially over, rumours of a triple dip recession fuelled by poor retail results in October have made consumers even more wary about excessive spending, even during the festive season.

This is perhaps why chief executive of Sainsbury’s, Justin King, is placing so much emphasis on the popular supermarket chain’s own brand ranges in the run up to Christmas. Earlier this week, he stated his belief that consumers will pass over branded goods in a bid to make their money go further this year, taking advantage of the By Sainsbury’s and Taste the Difference ranges when visiting Sainsbury’s stores.

By buying own brand, consumers can save around 20 per cent when compared to branded goods on average. Plus, with own brand ranges now putting a higher value on quality and presentation, many experts agree that own brand is now a viable competitor to branded rivals – as demonstrated in this year’s Good Housekeeping Christmas special, where supermarkets on the whole managed to beat luxury specialists in festive staples.

Even alcohol, which is largely dominated by branded specialists, is now a field where own brands are gaining a good reputation. Sainsbury’s Taste the Difference Irish Cream Liqueur is just one new alcoholic product which is tipped to top the charts this Christmas as a replacement for Baileys Irish Cream.

Mr King believes that shoppers will still be chasing quality this year, but that budgets will be restrained due to the economic uncertainties still playing a role in the UK’s retail industry.

He said; “People are spreading the cost because they want to have a special Christmas.

“They will splash out and Christmas will be about quality food and own label will be a key trend.”

Supermarkets will be especially keen for consumers to spend this Christmas, as not all have managed to post the successful results seen by Sainsbury’s this year. Higher fuel and food costs have seen profit margins plummet in many cases as shoppers rein in their spending on the weekly shop, while a higher volume of consumers choosing to shop online have meant that impulse purchases have not helped build up customer’s bills at the till in the same way they would have when shopping in store.

For chains such as Morrisons, which as yet has not expanded into the field of online retailing, the emphasis on internet shopping has been an even tougher blow.

However, it is market leaders Tesco that have been worst affected by the altering nature of the retail industry, as with their 230 nationwide Tesco Extra stores, they are finding it hard to attract enough consumers to make the large retail spaces profitable. Yet Darren Shirley, analyst at Shore Capital, believes that Sainsbury’s may face tougher competition from the supermarket giants when the £1 billion reinvention programme pioneered by chief executive Philip Clarke begins to take hold.

He says; “If market leader Tesco does begin to regain share from its investment programme, then Sainsbury’s remains the most vulnerable given the scale of trading overlap between the two groups.”

It appears, then, that the supermarket battle of the own brands will be decided this Christmas. With consumers desperate to save even at the traditionally most profitable time of year for retailers, a combination of both quality and value for money will decide who is at the top of the (Christmas) tree for the beginning of 2013.

Will you be purchasing own brand goods this Christmas, or do you tend to stick with the tried and tested branded goods? Would you buy own brand goods for all of the aspects of Christmas dinner, or do you think a combination of own label and branded goods is a better option?

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