Sainsbury’s has seen a loss of £290 million on flat retail sales in the half year to September 27th, as the grocery sector undergoes “structural change”.

The UK’s third-largest supermarket said that the effects of customers shopping more frequently as well as using online, convenience and discounters more meant that like-for-like sales throughout the sector were likely to be negative for the next few years. In the 28 weeks ended September 27th, the group said that its own like-for-like sales had fallen 2.1% and added that it had taken total one-off charges of £633 million, including £287 million for altering its store opening plans and developments it will no longer build.

Sainsbury’s added that it had “robust plans” to address the challenges felt throughout the sector, including £150 million in price cuts and investment in its non-food business. It added that it would reduce costs by cutting store openings and “working closely with suppliers”.

Mike Coupe, Sainsbury's chief executive said: "We anticipate the next couple of years in our industry will be extremely challenging, the reality is we are seeing deflation for the first time in probably around 10 years."

"We are acknowledging we are not going to build out as many large supermarkets as we were anticipating, so that results in the fact that the land becomes less valuable.”

He added: "We have examined every aspect of our business and we have good foundations for future growth in our supermarket and convenience estates, our online and non-food businesses and in Sainsbury's Bank. However, we need to make sure that we are investing in the right areas and by reducing our costs and capital expenditure we are ensuring that we have the resources to enable us to do so.

"Sainsbury's is a great business. Our consistent outperformance of our main supermarket peers over the past five years is evidence of this. We are facing into a once-in-a-generation combination of cyclical and structural change in the industry, but I firmly believe that this strategy, building on our unique heritage and track record of success and delivered by the most experienced management team in retail, will focus and energise our business to the benefit of customers, colleagues and shareholders alike."