Blackfriar: Supermarkets feeling the squeeze as shoppers cut back

Sainsbury’s chief executive Justin King said that during his 28 years in groceries, this is the toughest it’s ever been for consumers.

Tesco reported another fall in underlying UK sales and said that the rising cost of petrol and higher utility bills are forcing consumers to cut back.

Liberum analyst Simon Dunn described Tesco’s first quarter as “quite disappointing given that it includes the April bonanza”, referring to the surge in demand during a sunny Easter and the Royal wedding.

Things were a bit more jolly at Sainsbury’s, which managed to beat Tesco with a 1.9 per cent increase in like-for-like sales excluding fuel and including VAT, in the 12 weeks to June 11.

That was higher than the one per cent growth reported by Tesco for the 13 weeks to May 28.

Whether it was the 300 miles of bunting, 159,000 flags or 49,000 Royal wedding commemorative mugs that boosted Sainsbury’s sales remains to be seen.

But one trend is emerging. Supermarkets that make the most of their unique selling points are winning. Asked why Sainsbury’s is outperforming Tesco, King said it has focused on value for money without making compromises.

Its Basics discount range recently overtook Leeds-based Asda’s Smart Price brand to become second after Tesco’s Value label.

Sainsbury’s is cutting prices while sticking to its values. Its customers want cheaper goods but they don’t want battery farming. They want to know that the Basics goods are still ethically sourced. In the meantime Asda’s focus on everyday low pricing, no gimmicks, the George clothing brand, the “Asda Mums” ethos and the successful relaunch of the group’s own brand as “Chosen By You” has put it back in the game after it lost its way a year or so ago.

Out of all of them Bradford-based Morrisons has the biggest hill to climb. It is desperately behind its rivals in internet shopping and convenience, but these are areas being addressed by chief executive Dalton Philips.

In some ways Morrisons has the biggest opportunities because it is so far behind its rivals. The next year will be an interesting one.

Yorkshire’s green ambitions hardly need underlining, but if they did, look no further than UK Coal and Pressure Technologies.

The coal miner and engineer, though vastly different businesses in everything from scale to operations, both share a common theme. They have seen the potential of green energy, and are developing technology to profit from it.

Doncaster-based UK Coal, Britain’s biggest coal miner, is unsurprisingly keen to develop green technology to help mitigate its hefty contribution to UK carbon emissions.

Its latest plan is a tie-up with its biggest shareholder, Peel Holdings, to develop schemes including waste-to-energy and recycling plants on 11 of its sites across the north. The group already has a number of waste schemes in place, and is also erecting wind turbines on its vast estate of former coal pits.

Crucially for debt-laden UK Coal, ventures of this sort give investors hope for the future.

Sheffield-based Pressure Technologies believes 2012 will bring a surge in orders for its biogas arm, which purifies gas created from decomposing waste. This can be used to fuel homes and cars.

Both of these companies can play a vital role in shifting the nation’s reliance from fossil fuels to more sustainable energy sources.

But while schemes like this will play a valuable role in powering the nation, they will contribute only a fraction of the power we need. The reality is our love affair with fossil fuels is not going to end any time soon. The priority has to be cleaning up generating power from fossil fuels. At least for the foreseeable future, this is the only way to keep the lights on.

Blackfriar hears that Leeds Building Society has found its new chief executive and an announcement is expected soon, very soon.

Speculation has been rife after Ian Ward announced he was standing down and anointed heir David Pickersgill went on sick leave. Internal candidates have been linked to the role but kingmakers (or queenmakers) will also have looked externally.

A spokesman said: “The recruitment process is at an advanced stage and we will make an announcement regarding the appointment of the chief executive at the appropriate time.”

Down the road in Bradford, Yorkshire Building Society has also been looking for a new chief executive to replace the departing Iain Cornish.

A spokeswoman said last night: “There’s no movement at the moment. We are in the final stages. There is no indication of an announcement.”

Blackfriar reckons that the Leeds announcement will come sooner, much sooner.