Sainsbury’s CEO Aims to UK Budget to Alleviate Spending Concerns, Reports Reuters

By James Davey

COBHAM, England – Consumers in the UK, already strained by the cost of living crisis, are unlikely to increase their spending until the anticipated tax and spending plans of a new Labour government are revealed, and interest rates are lowered, according to the Chief Executive of Sainsbury’s, Simon Roberts.

In an interview, Roberts indicated that while inflation is declining, wages are rising, and employment remains stable, shoppers are still hesitant to make larger purchases. "Discretionary markets continue to be difficult," remarked Roberts, who has over 35 years of experience in the UK retail sector and has led the supermarket chain since 2020.

"Consumers are understandably cautious as they seek clarity about the future," he added, which has led to a sustained reluctance to spend on non-essential items.

Recent consumer surveys indicate a significant drop in confidence, particularly after Prime Minister Keir Starmer’s comments on the UK’s economic challenges and the potential for tax hikes in an upcoming budget. This situation has raised concerns about sales heading into the Christmas season.

Sainsbury’s commands over 15% of the UK grocery market, placing it second only to Tesco. However, the company is more susceptible to economic downturns since about 25% of its sales come from non-food items, compared to roughly 7% for Tesco.

"We need to see interest rates continue to decline, as this has a direct effect on household spending. Clarity on the upcoming budget would also be beneficial," Roberts stated during a visit to a redesigned Sainsbury’s flagship store in Cobham, located southwest of London.

The Cobham store highlights an expanded food selection alongside offerings from the group’s Argos, Habitat, and Tu clothing brands. The Bank of England is expected to lower borrowing costs in November after keeping its key interest rate at 5% in September.

Despite the economic challenges, Roberts expressed optimism that consumers will choose to spend on food and drink during the festive season. "Over the past few years, especially during the pandemic and the inflation crisis, Christmas has been a time when people want to come together with friends and family. There is no complacency in our business; we’ve had three strong Christmases, and we’re preparing for another."

Roberts believes Sainsbury’s is well-positioned to cater to key consumer trends this Christmas, including more people dining at home, customers preferring one-stop shopping for food and general merchandise, and a heightened focus on value.

Under Roberts’ leadership, Sainsbury’s has implemented a strategy that matches the prices of essential items with those of discount retailer Aldi, while also enhancing offers for members of its Nectar loyalty program, funded through cost cuts. The chain has boosted product innovation and improved quality, availability, and customer service, resulting in a 16% increase in its stock value over the past year.

The CEO emphasized the importance of the government delivering on its promise to reform business rates, pointing out that Sainsbury’s pays nearly as much in property taxes as it generates in operating profit.