Sainsbury’s has achieved record commercial performance in the last few months, beating out rival supermarket firm Tesco with 0.8 percent quarterly growth. The grocery chain has benefited from rapid growth fuelled by its Taste The Difference range, which reached £1 billion in sales earlier this year.
Despite its growth, however, the supermarket chain is aggressively targeting its online rivals with rhetoric aimed at the introduction of new taxes. Sainsbury’s is leading the fight against what its chief executive calls ‘online tax avoidance’ – the offshore taxation strategy used by online retail companies like Amazon.com.
Sainsbury’s chief executive Justin King claims that the government’s current tax approach places an unfair burden on companies with a physical presence in the United Kingdom, while ignoring those based overseas. Many of Amazon’s online sales are shipped from outside the UK in an effort to avoid VAT and other taxes.
Despite a decrease in its corporation tax payments, Sainsbury’s still pays more tax than its online counterparts, Mr. King claims. The chief executive claims that online rivals are competing on an ‘unfair playing field’ in which taxes are primarily aimed at offline businesses with physical stores, rather than online merchants.
Given the frequency of tax avoidance scandals amongst UK-based online businesses, the Sainsbury’s executive has certainly struck a note that many can agree with. Web-based stores are one of the primary reasons for the decline in the British high street, according to many in the grocery and offline retail sector.
Sainsbury’s has benefited from aggressive expansion throughout the UK, with plans to open two new stores every week during 2013. The company saw a large increase in market share as the recent horse meat scandal caused Tesco, its main competitor, to lose much of its customer base.
