Sainsbury’s has achieved over £1 billion in retail operating profit for the fiscal year ending March 2025. But this success comes at a cost. After laying off 3,000 workers and shutting down all in-store cafes, the retailer is now preparing for the next big supermarket price war. Industry competition is heating up, and Sainsbury’s expects flat profits ahead.
Strategic Layoffs and the Supermarket Price War
In January, Sainsbury’s closed 61 in-store cafes and several hot food counters. These moves led to around 3,000 job losses. This cost-cutting strategy is part of a long-term plan to deal with rising expenses, including increased wages and national insurance contributions. The company hopes to save £650 million over two years by improving efficiency and automation—steps it sees as critical during the price war.
Competitive Challenges
Even with this year’s financial success, the future looks tough. UK grocers are locked in a fierce price war. Competitors like Asda are rolling out lower prices to gain an edge. To stay competitive, Sainsbury’s is doubling down on discount schemes like Aldi Price Match and Nectar Prices. These loyalty programs aim to keep existing shoppers and win new ones.
Grocery Growth Despite the Supermarket Price War
Sainsbury’s “food-first” focus has paid off. Grocery sales grew by 4.5%, contributing to a total 3.1% increase in retail sales. However, other parts of the business aren’t keeping up. Argos and other non-food categories dropped by 2.7%. In response, the company plans to open 15 new supermarkets and 25 convenience stores to support its grocery segment during the ongoing price war.
Digital Expansion
The company’s online grocery sales rose by 7%. Improvements in digital services, smoother ordering, and repeat purchases helped boost this growth. As more customers shop online, Sainsbury’s is investing in better digital platforms to stay ahead during the supermarket price
Future Outlook
Sainsbury’s expects to maintain profits at the £1 billion mark, but it won’t be easy. Costs are rising, and the supermarket price war is far from over. Still, the company remains focused on delivering value, improving operations, and retaining customer loyalty as it navigates the challenges ahead.
