Sainsbury’s estimated that more than 12 million shoppers would be better off as a result of its latest round of price cuts. On 21 March 2018, it announced it had cut the price of 930 everyday products both in-store and online. Sainsbury’s invested £150 million pounds into these price cuts, which it estimated would reduce the cost of a typical weekly shop by 8 percent.
On the day of the cuts, Brand View identified 843 products that reduced in price on the Sainsbury’s website which was advertised as having a “New Lower Price”.
What have Sainsbury’s reduced?
Some 77.8 percent of the price reductions were in the Grocery category. The Health & Beauty category represented 11.7 percent of reductions, ahead of both the Household and Baby categories.
Within Grocery, just over 60 percent of the reductions were on Ambient products. Chilled Foods accounted for 36.4 percent of the price reductions, while only 23 Frozen products were included in these price reductions.
In Health & Beauty, the Toiletries sub-category represented 61.6 percent of the price cuts. Almost half of the products that were reduced within this sub-category were Nivea and Right Guard deodorants; two of only six brands that had price reductions in this campaign.
The vast majority, 92.9 percent, of these Sainsbury’s price reductions were on Own Label products.
Only six brands were part of the price reduction campaign. The New Covent Garden Soup Company was the only non-Health & Beauty brand. The other five were Dove, Garnier Ultimate Blends, Nivea, Pantene and Right Guard.
Within the Health & Beauty category, Own Label accounted for almost half of the reductions. Nivea accounted for the most branded price reductions with 16 of the 99 total reductions in the category.
How deep are the cuts?
Brand View has compared the total cost of the basket of products that Sainsbury’s reduced, to that of their supermarket rivals to see how great an impact these reductions had. Sainsbury’s reduced the price of the products by an average of 15.1 percent.
The price cuts made by Sainsbury’s meant that it was cheaper for this basket than all of the retailers analysed, with the exception of Asda. However, prior to the cuts it was already cheaper than Ocado and Waitrose, for this basket. The reductions meant that it went from being 9.4 percent more expensive than Morrisons to 5.7 percent cheaper and from 8.9 percent more expensive than Tesco to 7.5 percent cheaper
Asda was the only retailer that Sainsbury’s was still more expensive than after the price cuts. It went from 17.7 percent more expensive than Asda to 1.3 percent.
The vast majority of the compared products were in the Grocery category, which showed a similar impact to the basket as a whole. Sainsbury’s became cheaper than Morrisons and Tesco, extended the basket cost difference between Ocado and Waitrose and remained more expensive than Asda, despite a 13 percent reduction in the basket total.
The Health & Beauty category saw the greatest change in pricing, as Sainsbury’s swung 32.1 percent to become 4.3 percent cheaper than Morrisons. These big swings are largely due to the large discounts Sainsbury’s was able to offer on the branded items in this category.
We have yet to see a price reduction response from Sainsbury’s rivals on these products. However, looking at past responses, we can expect other supermarkets to announce price cuts of their own.