By Jonathan Davies

Sainsbury's has reported a fall in sales for the third quarter in a row as the supermarket price war continues.

Like-for-like sales, which exclude new stores and fuel, were down 2.8% in the three months to the end of September. But it wasn't as bad as many analysts predicted. Market experts had expected a drop of 3.5-4%.

Total sales, including those at stores open for less than a year, were down slightly to 0.8%.

Sainsbury's said it expects sales for the second half of the year to be "similar to the first half".

Short-term competition for "deflation in many areas of our business" was a key reason behind the drop in sales, Sainsbury's chief executive Mike Coupe said.

Sainsbury's and the three other members of the 'big four' supermarkets - Asda, Morrisons and Tesco - have become embroiled in a price war to compete with rising competition from budget chains like Aldi and Lidl.

Speaking to BBC Radio 4, Mike Coupe said: "Clearly in the last few months the pace of change in our industry [has meant it] has changed beyond all recognition.

"Customers are shopping very differently to the way they were shopping even a year ago. So we are seeing an increase in the number of outlets available to them and they are shopping much more frequently and little and often shopping so these trends are changing very rapidly.

"Clearly there are challenges in the marketplace you can't deny that but there are equally fantastic opportunities for us."

John Ibbotson, director of the retail consultancy Retail Vision, said: "Cash-strapped consumers are reigning in on discretionary spending and increasingly deserting the big boys for the low cost discounters, or treating themselves to a premium upmarket experience in Waitrose.

"Who needs Sainsbury’s, or Waitrose even, when you can get £9.99 Beluga Caviar at Aldi?

"Mike Coupe has done the right thing with his tie up with Netto to open discount stores and last week’s commitment to lower prices and brand matching ASDA. But it’s too little too late."

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