Sandwiching Consumer Confidence: Sainsbury's CEO Calls for Clarity in UK Budget

As UK households continue to feel the strain of the ongoing cost of living crisis, Sainsbury’s Chief Executive Simon Roberts has voiced concerns about consumer spending, emphasising that clarity in the upcoming budget could play a crucial role in boosting confidence.

Despite inflation easing and employment levels remaining strong, Roberts noted that UK shoppers remain cautious, especially with discretionary spending.

"Consumers inevitably are wanting to be clearer about what's going to happen next," Roberts said, highlighting that uncertainty around government policies and potential tax increases in the 30 October budget is adding to this cautious behaviour.

Sainsbury’s, Britain’s second-largest supermarket chain, is heavily reliant on non-food sales, which make up 25% of its revenue, in contrast to competitors like Tesco, where non-food accounts for only 7%. This dependence on discretionary spending leaves Sainsbury’s particularly vulnerable to consumer hesitation in the current economic climate.

Roberts remains hopeful, however, that Christmas will still bring a boost in spending, as it has done over the past few years despite economic challenges. He expressed confidence that Sainsbury’s would enjoy a “strong” festive season, underlining the importance of this period for the retailer's performance.

Looking ahead, Roberts urged for further reductions in interest rates and government intervention to restore consumer confidence, which he believes is critical to reviving the retail sector's momentum​.

Under Roberts, Sainsbury's has benefited from a strategy to match discounter Aldi's prices on over 650 essential items and provide better offers for members of its popular Nectar loyalty scheme, financed by cutting costs.

He has stepped up product innovation and moved to improve quality, availability, and customer service.

The CEO said it was critical the government came through on its promise to fundamentally reform business rates, noting Sainsbury's pays almost as much tax on its properties as it makes in operating profit.

Source: Reuters