Sainsbury's boss Mike Coupe: 'We’ve ridden the storm' of cost pressures

After competing in a sector that has been characterised by food price deflation for around three years, inflation is now starting to creep in to the grocery sector.

The tumbling value of the pound following the Brexit vote and the spike in the price of commodities such as oil have heaped pressure on supermarket chains and made it harder for them to keep shelf prices down.

But Coupe suggested Sainsbury’s had “done a remarkable job” in preventing costs being passed on to its customers since the shock EU referendum result last June.

Mitigating costs

Speaking after Sainsbury’s unveiled a 0.3% increase in fourth quarter like-for-like sales – driven by a 4.3% spike in like-for-likes at Argos – Coupe said: “We’ve been through quite a significant period of time in the last nine months. What’s been remarkable, and I’m very pleased with, is that we’ve ridden the storm very well as an organisation.

“There are cost price pressures in the supply chain, but we’ve done a very good job of mitigating those.

“We’re doing everything we can within our business to make sure that we look at our own costs so that we minimise the impact on our customers.

“We are beginning to see some inflation coming through within the marketplace, so that would suggest that some of those cost price pressures are being passed through, but our job is to make sure we do everything we can to mitigate those pressures.

“I think we’ve done a remarkable job and I think that’s good for customers and ultimately good for our business.”

Predicting the future

When asked how much of an impact cost pressures would have on prices later in the year, Coupe admitted it was “very difficult to predict the future.”

But he insisted he was confident that Sainsbury’s was “in the right place, doing the right things and investing in the right areas of the business,” including online, convenience, clothing and general merchandise.

Coupe said Sainsbury’s had “moved quickly” to integrate the Argos business following the £1.4bn acquisition of Home Retail Group last September and reaffirmed his goal to open 250 Argos shop-in-shops within its larger supermarkets “as quickly as we can.”

However, he again refused to be drawn on the number of standalone Argos stores that would be closed or relocated.

Sainsbury’s shuttered 11 Argos stores during its fourth quarter and still has 57 Argos concessions in Homebase stores, which will be closed following the sale of the business to Bunnings owner Wesfarmers.