Sainsbury's announced its first drop in profits for a decade today as it became the latest supermarket giant hit by British shoppers' changing habits.

The UK's third biggest grocer racked up a profit of £681million for the year to March 14 - a 14.7% decline on a year earlier after a period in which like-for-like sales dropped 1.9%.

But the chain recorded a bottom-line loss of £72million when including an accounting write-down to cover the lower value of its property estate.

Despite profits of £681million, Sainsbury's suffered a loss of £72million when a write-down on its property values was taken into account

The so-called 'Big Four' supermarkets - Asda, Sainsbury's, Tesco and Morrisons - have all been struggling with a shift in the way consumers shop, with many customers now favouring smaller, more frequent purchases.

Competition from discount stores like Aldi and Lidl, as well as food price deflation, have also hit takings.

The combined profit of the biggest three UK-listed supermarkets is expected to shrink to less than £1billion over the coming year, according to some City analysts.

Overall sales, excluding VAT, were £23,775 million - down 0.7 per cent from £23,949 million last year.

Sainsbury's chief executive Mike Coupe said today: 'The UK marketplace is changing faster than at any time in the past 30 years which has impacted our profits, like-for-like sales and market share.

'However, we are making good progress with our strategy, and our investment in price and quality is showing encouraging early signs of volume and transaction growth.'

Sainsbury's also cut its full-year dividend for shareholders by 23.7% and expects further falls in like-for-like sales in the current financial period.

The value of the company's property decreased during the year by £900 million to £11.1 billion, mainly due to a reduction in market rental values. The group has 597 supermarkets and 707 convenience shops.

Mr Coupe believes concentration on simpler promotions and a focus on quality as well as the expansion of the firm's online and convenience business can combat the threat posed by Aldi, Lidl and others.

The company now expects to open one or two new convenience store every week and use empty space in its current stores to boost the sale of non-food items.

Sainsbury's follows other 'big four' chains left counting the cost of competition from budget supermarkets

Sainsbury's share price has fallen over the past year and the company has cut its full-year dividend by 23.7%

Mr Coupe added: 'We also have significant opportunities to grow our business. Clothing, general merchandise and financial services have all performed well over the past 12 months, as have our convenience and online channels.

'We have a significant ambition to grow these areas over the coming years.'

Today's announcement comes just weeks after Tesco posted a loss of £6.38 billion - the biggest in the supermarket's 96-year history - after it was also forced to slash the value of its property empire.

Analysing today's results, Kevin Evans from marketing consultancy Added Value said: 'Given the one-off write down, this announcement should not be viewed with the same drama as Tesco's recent loss.

'However, the drop from previous years shows the pressures exerted by discounters on the 'Big Four' is not a Tesco-specific phenomena, especially given the falling profits from Morrisons announced in March.

'With pressure continuing on the cost of living, and especially with the uncertainty tomorrow's election is likely to bring, this should serve as an early warning for investors that consumers are more than happy to look for alternatives and vote with their feet.'

Sainsbury's chief executive Mike Coupe says the company is now hoping to open more convenience stores