Discount supermarket Netto is set to return to the UK as part of a joint venture with Sainsbury's that will take on rivals Aldi and Lidl.
It's Britain's second biggest supermarket chain but it's new figures reflect Britain's struggling household budgets.
What Justin King told me will serve as a sobering financial warning in the week we were told that the economy is on the mend.
These are "very challenging times for the grocery industry" but Sainsbury's is doing well against its immediate competitors, according to the supermarket's outgoing chief executive.
Justin King told Good Morning Britain Sainsbury's was still "growing a lot stronger than our grocery competition" and the whole industry was dealing with low growth.
Outgoing Sainsbury's chief executive Justin King says customers are "spending cautiously" as the supermarket chain posted a fall in sales in his final quarter before departing.
– Justin King, Sainsbury's CEO
Throughout the quarter we have continued to invest in reducing prices and improving quality, increasing the value of our offer. Lower food price inflation and reduced fuel prices are a welcome respite to customers’ finances but they continue to spend cautiously, leading to industry growth in the quarter being the slowest in a decade [...]
We remain confident that our clear strategy and differentiated offer will allow us to continue to outperform our supermarket peers through the remainder of the year.
Sainsbury's like-for-like sales including fuel fell 2.4% in the first quarter of 2014, according to the company's trading statement.
Like-for-like sales excluding fuel were down 1.1%.
Total retail sales at Sainsbury's were up 1% in the first quarter of 2014, the supermarket has announced.
- Tesco reported its worst sales figures for 40 years last week.
- The British Retail Consortium reported food sales in the UK are declining for the first time in six years by 0.2%.
- A recent survey from The Institute of Grocery Distribution estimates that between 2012 and 2017 sales at superstores will grow by just 6%, approximately £3.3bn.
- Over the same period, takings at convenience formats are expected to rise by more than 28%.
- Discount retailers will see a growth of 65% and online is expected to rise by a whopping 97.7%.
Supermarket giant Sainsbury's are expected to announce a drop of between 1-1.5% in their life-for-like sales later this morning.
The news comes as chief executive Justin King bows out after 10 years in charge of the supermarket.
This would be the second consecutive quarter of falling sales for Sainsbury’s, which had previously enjoyed nine years of unbroken sales growth under Mr King.
City experts have warned the retail giant has a "tough year ahead".
However, the "Big Four" supermarket cleared £1bn in annual sales for the first time last year and announced plans to expand its convenience store business.
Sainsbury's has recalled some of its own-brand olives after discovering glass in "a small number of jars".
The supermarket said they had issued a small-scale product recall as a "precautionary measure" after receiving complaints from customers.
A spokeswoman said anyone with jar with a best before date of 13/1/17 should return the product and would get a full refund.
Outgoing Sainsbury's boss Justin King has capped his decade in charge of the supermarket by announcing a ninth successive year of annual profits growth, but warned of tough times ahead.
Underlying profits before tax rose 5.3% to £798m in the year to March 15, but like-for-like sales for the period were almost flat, edging up 0.2%.
Mr King, who will hand over the reins of the grocer to commercial director Mike Coupe in July after 10 years in charge, said a focus on quality, affordable own-brand products had helped Sainsbury's succeed in a tough retail environment.
But he warned: "While the general economic outlook is showing some signs of improvement, conditions in the food retail sector are likely to remain challenging for the foreseeable future as customers continue to spend cautiously."
Sainsbury's says it has immediately withdrawn 500g bags of SO Organic sultanas from its shelves after "low levels of salmonella were found during routine testing".
– Sainsbury's statement
Food safety is our top priority so we immediately took this product off display and, as a precautionary measure, we are asking customers who have bought these sultanas to return them to their nearest Sainsbury’s store where they will receive a full refund.
We apologise to customers for any concern and inconvenience this causes.”