Sainsbury’s will aim to build on the momentum of a strong 2023 with competitive prices, continuing to draw customers back from discount retailers Lidl and Aldi.
The news came ahead of Sainsbury’s strategy update, due to be presented on 7 February by chief executive Simon Roberts.
Investors and analysts are expecting Roberts to set a new target for cost savings to finance both better prices and a 9% pay hike for 120,000 workers from March in a move worth £200 million.
Given Sainsbury's stronger balance sheet, they also expect Roberts to announce plans to begin a share buyback.
Analysts at Barclays said the retailer can afford to spend up to £300 million a year.
Sainsbury's said last week it will wind down its banking business and instead offer financial products through third parties.
Better Value
Roberts launched his "Food First" strategy in 2020, shortly after becoming CEO, which concentrated Sainsbury's efforts on its core business, with a focus on better value, product innovation and service.
The strategy has proved successful, helping the group navigate the pandemic and an ongoing cost-of-living crisis.
Sainsbury's shares rose by 39% in 2023, but have fallen this year on concerns over the outlook for general merchandise.
Building On Momentum
The group is benefiting from matching Aldi's prices on more than 550 key items and providing better prices to members of its popular Nectar loyalty scheme.
The scheme is financed by taking £1.3 billion of costs out of the business in the three years to the end of March.
Completion of that programme will mean it has cut £2.5 billion of costs over the last decade.
Speaking last month after reporting robust Christmas trading in food, Roberts said the strategy update would be "all about how we continue to build on our momentum."
He said, "We keep finding areas where we haven't found the ceiling, we can push further, we can do an even better job for our customers."
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