Insights from Sainsbury’s CEO Simon Roberts on Consumer Spending

By James Davey
COBHAM, England (Reuters) – Britons, facing a cost of living crisis, will delay strong spending until the new Labour government reveals tax and spending plans and interest rates decrease, according to Sainsbury’s CEO Simon Roberts.

Roberts emphasized that despite declining inflation, increased wages, and stable employment, UK consumers are hesitant to spend on larger items.

“Discretionary markets continue to be difficult,” said Roberts, who has over 35 years of retail experience and has led Sainsbury’s since 2020.

He noted that consumers are seeking clarity about future economic directions, promoting continued caution in discretionary spending.

Recent surveys indicated that UK consumer confidence has decreased following Prime Minister Keir Starmer’s economic warnings and the potential for tax hikes in the upcoming budget on October 30, raising concerns about holiday trading.

Sainsbury’s holds over 15% of the UK grocery market, coming second to Tesco. However, a notable 25% of Sainsbury’s sales come from non-food products, making it more susceptible to downturns than Tesco, where non-food accounts for only 7%.

Roberts remarked, “We need to see interest rates continue to come down because that directly impacts household spending. I think clarity in the budget is helpful.” This was stated during a visit to their revamped flagship store in Cobham, southwest London, which features expanded food offerings alongside their Argos and Habitat merchandise and Tu clothing brand.

Britain’s central bank is anticipated to reduce borrowing costs in November, following a rate hold at 5% in September.

Despite ongoing economic uncertainties, Roberts remains optimistic that consumers will spend on food and drink during Christmas.

“What we’ve seen over the past three or four years is that Christmas is a time for connection with friends and family.”

Roberts noted that Sainsbury’s has experienced three strong Christmas seasons and is preparing for a fourth.

He identified key consumer trends for the upcoming holiday: increased home dining, preference for one-stop shopping for food and general goods, and a focus on value.

Under Roberts’ leadership, Sainsbury’s matched Aldi’s prices on over 650 staple products and enhanced offers for Nectar loyalty scheme members while cutting costs. This has led to product innovation and improved quality, availability, and customer service, with shares rising 16% over the past year.

Roberts stated that reforming business rates is crucial, highlighting that Sainsbury’s pays nearly as much tax on properties as it earns in operating profit.