LONDON, March 8 Britain's major supermarket
chains could benefit from a small decline in overall spending by
Britons because people will eat at home more rather than dining
out, the boss of Sainsbury's said on Wednesday.
British shoppers are starting to feel the strain of rising
prices caused by last year's Brexit vote, suggesting the economy
is heading for a slowdown just as London gears up for divorce
talks with the European Union, recent surveys and data have
"If there's a small squeeze it's not necessarily a bad thing
for a large grocery chain," Sainsbury's Chief Executive Mike
Coupe said at the RetailWeek Live conference.
Sainsbury's is Britain's second largest supermarket group,
trailing market leader Tesco in annual sales.
"I suspect if we see customers' incomes being squeezed - and
we're beginning to see a slowdown in that disposable income
growth - actually supermarket chains tend to do better because
people stop eating out and start eating in," he said.
"I'm not saying I would ask for it because I think broadly
speaking it's not good for the economy more widely."
Coupe noted that when consumers do opt to eat at home they
tend to "trade-up" to premium brands, seeing them as the closest
substitute to dining out.
Industry data published on Tuesday showed British food
inflation has doubled in a month, with the price of staples
including butter, tea, lamb and fish all rising, reflecting the
weaker pound since June's Brexit vote as well as commodity price
"If you think about the effect of exchange rates it's little
short of remarkable that the industry has managed to hold down
prices for as long as it has," said Coupe.
"Inevitably there are price pressures in the market place
but this is against a backdrop where food prices have dropped by
4 percent over the last couple of years."
Last year Sainsbury's bought Argos-owner Home Retail for 1.1
billion pounds ($1.3 billion), enhancing its online logistics
and general merchandise range.
The group wants to have 250 Argos digital stores in
Sainsbury's shops over three years. Coupe said it would have 41
as of the end of the week.
It is also targeting synergies of 160 million pounds in
three years. Coupe told the conference that figure was
conservative as it did not take account of growth in the Habitat
brand that was also part of the Home Retail deal or of
anticipated growth in financial services.
Sainsbury's will update investors on fourth quarter sales on
($1 = 0.8223 pounds)
(Reporting by James Davey; Editing by Keith Weir)