Sainsbury’s flagged the success of Brand Match, the coupon at till initiative it rolled out in November, as an important contributor to its success as it unveiled full-year figures.
The retailer this morning posted underlying profits up by 7.1% to £712m in the year to March 17, beating City forecasts of a 5% rise.
Brand Match gives shoppers who spend £20 or more, and have at least one comparable branded product in their basket, with a coupon for the difference in price with Asda and Tesco on 14,000 branded goods if Sainsbury’s is more expensive.
What Brand Match does – along with the Asda Price Guarantee – is negate the issue of price in the shopper’s mind. Sainsbury’s has long argued shoppers believe it is more expensive than it really is.
Analysts have repeatedly said since Tesco launched its maligned Big Price Drop that price, while important, is only one factor in winning shoppers despite the squeeze on consumer spending.
By assuring shoppers that Sainsbury’s offers good value on branded lines, it can also emphasise other qualities such as appealing stores with a good quality range, ethically sourced products, a large array of fresh foods and knowledgeable counter service.
It is of course worth emphasising that Brand Match only affects branded goods, which represent roughly half of Sainsbury’s product range. Growth in own label has been strong, which may reduce dependence on brands.
Video - Brand Match: How does it work?
Shoppercentric managing director Danielle Pinnington says the promotion’s popularity has been in tune with consumer sentiment.
She says: “The Sainsbury’s figures demonstrate that shoppers trust a Brand Match or moneyback-style offer more than promotions on individual products. We’re certainly picking up a trend back in favour of the delayed response mechanisms like vouchers or coupons versus immediate returns of multibuys/BOGOFs, and we know shoppers are increasingly cynical about the reality of the promotions being presented to them in-store.
“Promotions can be such a double-edged sword: a spike in sales – yes; a change in mid to long term behaviour – unlikely.”
One question remains – where next? With little market share to be won in the UK, the old spectre of international expansion and the retailer’s sourcing office in China is bound to resurface.
Sainsbury’s has not ruled out international expansion in the long term, and it has previously traded in Egypt. The Chinese operation has been recently bolstered by former logistics director – and a key figure in the UK business – Dave King who is now leading the team in China.
Sainsbury’s argues there’s still plenty of expansion opportunities in the North and Scotland, online and in convenience.
The UK may remain a land of opportunity for JS. But for how long, as a revitalised Tesco, an on-song Asda and a determined Morrisons all vying for dominance?
Sainsbury's profits rise as it takes record market share
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Analysis: Brand Match has helped, but where next for Sainsbury's?