Sainsbury's profits from rivals' supply chain problems

19 March 2013

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19 March 2013 | Adam Leach

Sustained and long-term investment in its supply chain together with local sourcing gave Sainsbury's an edge over its competitors while they suffered from the horse meat scandal, according to the retailer’s chief executive.

When competitors were forced to remove products from their shelves after they were found to contain equine and other non-advertised DNA, Sainsbury’s was unaffected. This - coupled with strong sales on Valentine’s Day and Mother’s Day - helped the retailer record 4.2 per cent growth in like-for-like fourth quarter sales.

In his commentary on the results, Justin King, chief executive at J Sainsbury, highlighted some of the things that enabled it to take advantage of the situation. “We have invested heavily in our supply chain and sourcing credentials over many years, including initiatives such as our farmer development groups. Our fresh chicken has been 100 per cent British since 2003, all of our fresh beef is sourced from the UK and Ireland and we have routinely carried out DNA testing on our products for over 10 years,” he said.

He reiterated the need for the sector to focus on the supply chain, a point he made last month when he said the horse meat scandal needed to be addressed with “urgency and rigour”.

“The issues experienced by the industry over the last quarter underscore the importance of our detailed understanding of our supply chain,” he said today.

In the fourth quarter, the company added 163,000 feet of floor space, opening three supermarkets and 19 convenience stores.

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