Is Sainsbury winning the UK supermarket wars?

It certainly is if you see the market as we used to: a carve-up between Tesco, Asda, Sainsbury and Morrisons.

Unknown-5The company, helmed by Justin King (left) for the last ten years, has seen its market share inch up to 16.8 per cent, which puts it marginally ahead of Asda and into second place, although still way behind Tesco’s 30 per cent.

And half-time profits have hit £400m, about on a par with Morrisons. And thereby hangs a tale.

Morrisons has been losing market share, in part due to the depredations of German-owned discounters Aldi and Lidll and also because it lacks home deliveries and doesn’t have many convenience stores (both of which it’s remedying). But home deliveries, particular, don’t make much money – some analysts would say, don’t make any money. So Morrisons profits may be about to take a tumble.

But Sainsbury, too, has to fend off Aldi and Lidl. Not only are their (still rather limited) offerings cheap but many are amazingly good quality, especially considering the price. I heard someone at the weekend waxing lyrical about Aldi own label gin, for under a tenner. And someone else told me they were offering Harrods-style megabucks hampers for five hundred quid – just the ticket, if you’re into that sort of thing.

With Waitrose storming away at the top end of the market (admittedly from a relatively low base), CEO King still has work to do although he’s steered a clever course in the middle market; sticking to the old Sainsbury’s mantra of quality and value.

He’s certainly in a better place than his three big rivals. Tesco, under CEO Phil Clarke, still has to show it can manage its sprawling estate (not just in the UK but Europe and the Far East too) profitably while Asda needs to compete on Sainsbury territory as well: presumably the task given to its new ad agency VCCP. Morrisons, as we’ve said, has to make big changes.

Sainsbury’s Christmas TV campaign breaks tonight (with a crowd-sourced ad, god help us) so we’ll have a look at that in due course. The company and long-term agency AMV/BBDO still need to produce a big new campaign idea to replace the departed Jamie Oliver.

But King deserves his plaudits. Most Sainsbury stores are good places to visit.

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