Sainsbury's has set a new cost savings target of £1bn over the next three years, while promising to boost returns to shareholders.

The plans are part of the supermarket chain’s 'next level Sainsbury’s' strategy, aiming to build on the ‘food first’ strategy which was launched in 2020.

As part of these plans, Sainsbury’s said it will deliver further growth in food sales volumes ahead of the market by March 2027, and has also pledged to deliver growth in retail operating profit and higher customer satisfaction, increase its Nectar loyalty scheme and invest in technology and infrastructure.

Chief executive at Sainsbury’s, Simon Roberts, said: "Our Food First strategy has delivered on its promise over the last three years, making Sainsbury's a stronger business with a much sharper position on value and a major refocus on our innovation. Customers have recognised the progress we've made, as our market share gains have shown.

"Our 'next level Sainsbury's' strategy is about giving customers more of what they come to Sainsbury's for - outstanding value, unbeatable quality food and great service. Thanks to our scale, our brand and our people, we are in a unique position to deliver for customers across Sainsburys, Argos and Nectar.

"We're going to build on what's driven our success since 2020. We're determined to be 'first choice for food', ensuring more customers in more of our stores can enjoy more brilliant Sainsbury's food. That means more space for our food offer, while still delivering the general merchandise products customers want from us. That way, not only will we find more ways to delight new and existing customers, we will also continue growing volume market share."

As part of the cost savings, the supermarket will look to installing more automated tills in stores, as well as investing in warehouse robots and AI forecasting tools.

Although job losses have not been ruled out, Roberts made no announcement on redundancies, stating that workers would be able to change their roles and adapt to new working styles.

Investment director at AJ Bell, Russ Mould, added: "To Sainsbury’s credit, its performance has been good in recent years and there is finally an energy about the business which has been absent for decades.

"However, its growth plan is not something that is guaranteed to work its magic. It’s not hard to dream up such a wish list to improve the company’s fortunes as it is basic business sense. Achieving the goal is another matter and it will cost money – something the market typically hates. Sainsbury’s shares fell on the news, but interestingly so did Tesco and Marks & Spencer as they face new competitive threats.

"The grocery space is already highly competitive and other supermarkets have their own initiatives in the fight to grow market share. No doubt Sainsbury’s rivals will pull their own rabbits out of the hat in the quest to fill shoppers’ baskets."

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