Tesco has launched a new “Price Promise” initiative in which the UK’s largest food retailer claims it will match the price of branded and non-branded products at Asda, J Sainsbury and Morrisons.
However, Justin King, chief executive of Sainsbury’s, said the vast majority of own-brand products are “incomparable” and that the company could report Tesco to the Advertising Standards Authority if it does not believe the comparisons are accurate.
“You can be sure that we will point out to Tesco where their products are unfairly compared to ours,” Mr King, who claimed Sainsbury’s own-label products are “higher quality”, said.
“There are significant conversations about how on earth you truly and fairly compare own-brands.”
The Sainsbury’s chief executive was speaking as the company reported a 3.6pc rise in like-for-like sales over the last ten weeks, beating expectations in the City and boosting hopes of a recovery in the British economy ahead of the Budget, reports The Telegraph.
Sainsbury’s said like-for-like sales excluding fuel rose 3.6pc in the fourth quarter of its financial year to March 16, with total sales excluding fuel up 6.3pc. For the full-year, like-for-like sales rose 1.8pc.
Sales for the supermarket group have benefited from the discovery of horse meat in beef products sold by rivals Tesco and Asda.
No horse meat has been found in Sainsbury’s products and Mr King said the company has “gained customers’ trust” through investment in “our supply chain and sourcing credentials over many years”.
However, the Sainsbury’s chief executive also played down the impact of the horse meat crisis on the company’s figures, instead pointing to a rapid growth in sales from own-brand products, convenience stores, the internet, and clothing.
Sales from convenience stores rose 18pc during the period with online food sales up almost 20pc. The sharp rise in online sales highlights why rival supermarket Morrisons last week followed Sainsbury’s and said it would start selling food over the internet.
Sainsbury’s also reported that annual non-food sales have cleared £1bn for the first time and are growing at three times the rate of food sales. Clothing sales rose almost 20pc year-on-year, with home accessories up almost 25pc.
“Our focus on quality is an important reason why customers choose to shop with us, and why we are seeing strong growth in our own-brand products,” added Mr King.
“With the relaunch of the By Sainsbury’s range almost complete, sales have grown by around 9pc year-on-year. Our differentiated own-brand offer is complemented by the price reassurance of Brand Match on branded products.”
Sainsbury’s “Brand Match” scheme matches Tesco’s prices on branded products. Mr King said the company will not expand the programme despite Tesco launching “Price Promise”.
“We think its strength is precisely that – brand match,” he added.
However, a spokesperson for Tesco defended “Price Promise”, saying: “It is quite a lot of work for us to do, but we use clear guidelines to ensure the comparisons are fair. Ultimately we do this because it’s what customers want us to do, given that approximately half of the average shopping basket in the UK is made up of own label products.”
Shares in Sainsbury’s rose by 6.2, or 1.7pc, to 371.40p, a two-year high, following the trading update.