Sainsbury targets hard pressed households with new advertising campaign

Δημοσιεύθηκε: 26 Μαρτίου 2008 - 10:18

LONDON (Thomson Financial) - J Sainsbury PLC has became the latest supermarket to emphasise its value credentials, launching a 'Feed your family for a fiver' campaign in response to increasing concerns over tightened household budgets.

Britain's third biggest grocer has launched the initiative in conjunction with celebrity chef Jamie Oliver, who has worked with the group for the last eight years.

''Feed your family for a fiver' is a very Sainsbury's way of addressing the issue of stretched household budgets. It's demonstrating, using Jamie, that you can still eat really well even when on a very tight budget,' chief executive Justin King told reporters.

The recipes, which are designed to feed a family of four, include meatballs and spaghetti, chili con carne, and sausage and mash. The initiative will be supported by a television advertising campaign, kicking off today.

Sainsbury's move will be seen as a response to aggressive marketing by rival Asda, owned by Wal-Mart Stores Inc, which has been highlighting its cheap prices since the start of the year in TV adverts based around a 'Dad's Army' theme.

William Morrison Supermarkets PLC, which has led the industry in terms of growth this year, has also been targeting the hard pressed consumer and King sent a clear message that Sainsbury will follow suit.

'You'll see us punching our weight in the advertising and promotion of price reductions. If consumer budgets weren't as stretched as they are, then a campaign like 'Feed your family for a fiver' wouldn't seem as relevant as it clearly does today,' he said.

King was speaking after Sainsbury reported a 4.1 pct rise in fourth quarter like-for-like sales excluding petrol, suggesting the industry remains resilient in the face of concerns over the general consumer environment.

Market expectations for underlying sales growth in the quarter had ranged between 3.5-4 pct.

Sainsbury, which has been under pressure from investors to realise value from its 8.6 bln stg property estate, also announced it is investing 273 mln stg to create a 50:50 joint venture with British Land Co PLC.

The deal incorporates 39 stores, with a valuation of 1.2 bln stg, representing a net equivalent yield of 5.1 pct.

Sainsbury said the joint venture 'unlocks the opportunity to significantly develop these stores and deliver an improved customer offer'. It plans to extend up to 25 sites by an estimated 500,000 square feet of net selling area.

The initial term of the joint venture is 10 years. After that, Sainsbury will retain an 'equal degree of control' over the ongoing ownership of the properties.

'This venture is an excellent opportunity for Sainsbury's to increase our interest in the future extension and development of many of our most important stores,' said King.

At 10.10 am, shares in Sainsbury were trading at 348 pence, up 11-1/2. They have taken a battering since talks with the Qatar Investment Authority over a potential 600 pence a share takeover, valuing the group at 10.6 bln stg, broke down last year.

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