ANALYSIS: Sainsbury's reaps benefits of clothing investments
Sainsbury's clothing business grew at double-digits in the first quarter
Sainsbury's is now reaping the benefits of the investment it has made in its clothing division, an analyst has said, after the UK retailer this morning (11 June) revealed the business grew at double-digits in the first quarter.
Sainsbury today said its clothing business continued to grow strongly in the first three months of the year, delivering double-digit like-for-like sales growth. This was against total retail sales that edged up 1% and like-for-like sales that fell 1.1%.
As much as this fall was largely expected by analysts, so too was the increase in clothing sales, which have continued to outdo those of its competitors, like Tesco.
Despite Sainsbury's flat sales growth, the retailer has been investing considerably in its clothing offer and Conlumino analyst Anusha Couttigane believes it is now reaping the benefits.
There are several strategic moves Sainsbury's has made to improve on its fashion offer, with a recent emphasis in particular on promotion, product and place areas. It is also currently trialling a new online clothing offer, increasing the reach of this business to customers across the UK.
"Although historically Sainsbury's has neglected to make its Tu label available for purchase online, it has nevertheless leveraged its online platform to promote the brand," Couttigane tells just-style. "This has mainly taken the form of well-executed TV ads and, in the long term, carefully planned online edits timed to seasonal fashion cycles."
Sainsbury's, as a family-orientated retailer, took this one step further by aligning its social media campaigns to its family-centred values, and last year encouraged customers to send in photos of their children wearing Tu clothing and featuring them on its website.
"This not only helped to strengthen its interaction with customers, but it also drew attention to the wide audience Tu clothing has, by posting evidence of the relevance of its clothing offer to family life," Couttigane said.
She added, however, that while Sainsbury's clothing has proven popular with women and children, the supermarket has been more sluggish in expanding its menswear range.
"The range development that Sainsbury's has recently invested in means the offer is now comprehensive enough to appeal to demographics of all ages, whether male or female. Although the focus as yet is mainly casualwear, leaving room for improvement in other target occasions, Sainsbury's has taken an important and positive step towards expanding the Tu offer."
Ultimately, Couttigane believes Sainsbury's investments have put it in a position where it is able to compete more effectively against its rivals' clothing offers. Particularly, she says, as Tesco's F&F and Asda's George labels have "long held a privileged position in both retailers' multichannels".
"On the one hand, this is the move that will most help to grow Sainsbury's clothing sales. On the other, it was a necessary move in order to compete and stay relevant in an increasingly convenience-driven market."
It will be important for new CEO Mike Coupe to continue this momentum when he takes over the corporate reins as CEO from the long standing Justin King next quarter.
Cantor analyst Mike Dennis noted: "Our view is that Sainsbury's new CEO, Mike Coupe, needs to continue with their value simplicity pricing strategy and convince suppliers that lower starting prices and lower promotional investment (weeks on deal and depth of price cuts) is the way forward."
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