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Sainsbury’s and Tesco: Retaining market share during the credit crunch
Sainsbury’s looks to be gaining ground on Tesco, at least in terms of sales revenue as the third largest (following Asda and Tesco) supermarket group announced a fourth quarter sales increase of 7.1% (excluding fuel). This, in conjunction with Tesco’s shrinking grocery market share, seems to make Sainsbury’s the biggest ‘winner’ following the horsemeat scandal, as consumers flock to the seemingly better quality meats and provisions in the iconic orange branded stores.
Whenever an industry-wide scandal or external shock racks a market or industry, it is a race for PR teams to engage their markets and install a damage limitation policy – damage here referring to the potentially disastrous implications for sales. And whilst the big four supermarkets have all gone about, in their own different ways, limiting the implications of the widespread, fraudulent selling of horsemeat in processed goods, Sainsbury’s benefited from being able to state simple facts about only being marginally effected by the fraud. And so the Sainsbury’s brand, built on a relative quality premium, has been able to weather a storm where ‘cheap and cheerful’ just doesn’t equate to a viable defence – note that none of the big four have admitted to economic reality and stated, candidly, “Well, you get what you pay for!”.
For years many had criticised Sainsbury’s on its balancing of price and quality, that they had got this wrong, and that they did not have a business model for the Information-Century – that specific accolade going to the niche-market targeting of Aldi and Lidl, on the cheap side, and Booths and Waitrose, on the premium side. It seems the naysayers have been confounded, and that brand Sainsbury’s has found a competitive advantage, even if this rests on the negative phenomenon of food scandals.
Find this interesting. For more, please read our report Sainsbury’s and Tesco: Retaining market share during the credit crunch.