Sainsbury’s CEO Simon Roberts has conceded the supermarket will need to work with its supply base to mitigate the impact of cost increases caused by Labour’s budget.
During a results call announcing “record” Christmas sales on 10 January, Roberts repeated warnings that Sainsbury’s would need to offset the cost pressures as a result of changes to National Insurance, and additional burden of packaging levies set to come in from April.
However, he insisted the supermarket would do everything it could to ensure it continued to offer the “best value” to customers.
Asked by The Grocer whether he anticipated difficult conversations with its supply base as a result, Roberts was conciliatory, but did not deny the need to work “closely” with both large and small suppliers to “navigate the environment ahead”.
“We are absolutely committed to doing everything we can to mitigate the impact of inflation,” Roberts said.
Highlighting new long-term agreements with fresh suppliers – like that with chicken farmers announced in September 2024 – Roberts insisted relationships with its supply base were as strong as they’d been ”for a very long time”. Farmers and suppliers would continue to be “at the heart” of how Sainsbury’s develops its business, he said.
“Suppliers have got costs coming at them as well of course, and so we’ll be working really closely to make sure that between us we find the best answers we can and we continue to give customers the best value we can,” he said.
Price cuts announced by Morrisons and Asda sparked claims of a new year price war as grocers go all out to stay competitive. Sainsbury’s did not clarify whether it planned to follow with its own round of further price cuts, however Roberts insisted it would work to “maintain its value position”.
“We exit last year with one of the strongest value positions we’ve had in a very long period of time and we intend to make sure we maintain that,” Roberts said.
Internally, Sainsbury’s inflation remained “quite substantially below” the sector level of 3.7% tracked by Kantar. However, the added costs of £140m as a result of changes to National Insurance alone from April in particular would bring further inflation as a result.
Roberts also repeated calls for government to “urgently” reform business rates so it is proportional and fair for retailers of all sizes. The government has indicated that reforms from 2026 will include higher rates for larger businesses occupying property with a rateable value over £500,000 in order to fund lower rates for smaller businesses. Around 80% of Sainsbury’s total business rates bill comes from its larger shops.
The government should also ensure the “regulatory burden” of EPR and other packing levies “is managed in its implementation” by being phased over time, Roberts said.
Sainsbury’s also used the results call to announce it would increase wages of 118,000 hourly-paid colleagues across Sainsbury’s and Argos by 5%. The additional pressures caused by the budget meant it would mitigate the cost by spreading the rise over the the year, with consecutive rises in March and August, rather than one single rise as usual, Roberts said.
Sainsbury’s ‘record’ Christmas results
Sainsbury’s enjoyed what it claimed was its “biggest Christmas ever”, with sales up 3.8% year on year over the crucial six weeks to 4 January. Repeating a trend seen across the sector this Christmas, Sainsbury’s relied heavily on loyalty promotions to drive spending during the period. Sainsbury’s shoppers saved £26 on average per big basket shop, Sainsbury’s said.
Shoppers had delayed their spend until later in the Christmas period this year, Roberts said, with Sunday 22 and Monday 23 being some of Sainsbury’s busiest days.
Sainsbury’s sold its highest volume of fresh food over the Christmas period, with productivity gains in its supply chain meaning its depots handled their “highest ever” volume of fresh food during that time.
None of this would have been possible without the work of Sainsbury’s supply base, Roberts said.
“Fundamentally, we’ve grown volume for five consecutive Christmases now, we’ve had the biggest growth in our volume of any of the larger supermarkets over the last two years. Suppliers want to see businesses that are growing their volumes. It’s really important for them to be able to fill their factories and to maximise the output they have.
“That basis gives us a strong position as we come into this period of time,” Roberts added.
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