Sainsbury’s boss looks to UK budget to lift dark spending By Reuters

By James Davey

COBHAM, England (Reuters) – Britons hit by a cost-of-living crisis will not start spending strongly again until the new Labor government sets out its tax and spending plans and interest rates fall further, the boss of supermarket Sainsbury’s said.

Chief executive Simon Roberts told Reuters that despite falling inflation, higher wages and solid employment levels, UK shoppers remain nervous about spending on bigger-ticket items.

“Discretionary markets continue to be difficult,” said Roberts, a veteran of more than 35 years in the UK retail sector who runs Britain’s second-largest supermarket chain as of 2020.

“Consumers inevitably want more clarity about what’s going to happen next, and because of that we’re seeing continued caution in discretionary spending,” he said.

Recent surveys showed UK consumer confidence fell following Prime Minister Keir Starmer’s warnings about the state of the UK economy and the likely need for tax rises in a budget on October 30, sparking fears about trading ahead of Christmas. .

Sainsbury’s has more than a 15% share of the UK grocery market, second only to Tesco ( OTC: ), but a quarter of Sainsbury’s sales come from non-food products compared to around 7% for Tesco, making it more vulnerable to a broader recession.

“We need to see interest rates continue to fall as this has a direct impact on household spending. I think the clarity of the budget, one way or another, is helpful,” Roberts said on a tour of Sainsbury’s revamped flagship store in Cobham, south west. from London.

The Cobham store features an increased food offering alongside the group’s Argos and Habitat general merchandise businesses and its Tu clothing brand.

Britain’s central bank is expected to cut borrowing costs in November after keeping its key interest rate at 5% in September.

Despite the economic uncertainty, Roberts is confident Britons will still give food and drink at Christmas.

“What we have seen in the last three or four years through the pandemic and the inflation crisis, Christmas has been a time when people want to be together with friends, family and loved ones.

“There is absolutely no complacency in our business. We’ve had three strong Christmases and we’re gearing up for the fourth to come.”

He said Sainsbury’s was well placed to benefit from what he saw as the big consumer themes for Christmas – more people dining at home rather than eating out, with time-strapped consumers preferring one shop for all their grocery and general merchandise needs and a focus. on the value.

Under Roberts, Sainsbury’s benefited from a strategy to match discounter Aldi’s prices on more than 650 essential items and offer better deals for members of its popular Nectar loyalty scheme, funded by cost cuts. He stepped up product innovation and moved to improve quality, availability and customer service. Its shares are up 16% over the past year.

The CEO said it was essential that the government delivered on its promise to fundamentally reform business rates, noting that Sainsbury’s pays almost as much tax on its property as it earns in operating profit.