Sainsbury Case Study

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  • Topic: Sainsbury, Sainsbury's, John Sainsbury, Baron Sainsbury of Preston Candover
  • Pages : 15 (5530 words )
  • Download(s) : 202
  • Published : January 22, 2012
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Introduction
Sainsbury’s is now the third most important food retailer in the United Kingdom. In 1995, Tesco overtook the company to become the market leader after more than 20 years of constant growing. It has recently been pushed back by Asda in 2003. Sainsbury’s Supermarkets employ over 145,000 people, including Sava Centre. A large Sainsbury’s Supermarket offers over 23,000 products, 40% of these are Sainsbury’s own brand. The Sainsbury’s supermarkets serve over 11 million customers a week and as at June 2002 had 463 stores throughout the UK. In the year ended March 2003 it reported worldwide group turnover of over £17.4 billion and profits of £454 million, with a total of over 170,000 full-time and part- time staff.

The enterprise was founded in 1869 from an idea of John James Sainsbury’s and his wife Mary Ann. The first store was opened in Holborn, London and was selling fresh foods and later specialised into packaged groceries. Their strategy was “Quality perfect, prices lower”. The stores were very innovative by having their own label lines and presenting the products to consumers in a new way. They had marble counters, mosaic floors, as well as staff uniforms. The success was sudden and many other similar stores were created in London. On every shop, there was a high cast iron sign saying 'J.Sainsbury’s.

In 1922, it became the Uk's largest grocery group, and so got incorporated as a private company under the name of 'J.Sainsbury Limited'. During these times they promoted quality fresh food produced with their own label line which made them extremely successful. The firm kept on growing even though it had to face the recession during the World War 2. Many stores got destroyed during London's bombardment and the decrease of the national income weakened the society. But in 1956, Alan Sainsbury’s became chairman after his father, John Benjamin' Sainsbury’s death. He came up with a new idea of promoting self-service supermarkets in the Uk after a trip to America. Their goal was to match quality of nationally branded goods with lower prices. The company went through its golden times. Innovative ideas and low cost of production gave the company a strong market position when it went public in July 1973.

At the time, the family owned 85% of the firm's shares. It was the largest ever flotation on the London Stock Exchange with £14.5 million available shares. The future of the company looked bright and they start replacing their 10 000 sq. ft. high street stores with self-service supermarkets above 20 000 sq. ft. New stores were opening in all England and the company invested in new technology. In 1991, the group was generating major profits and raised £489 million in new equity to fund the expansion of the superstores. In 1992, the long time CEO John Sainsbury’s retired and was succeeded by his cousin, David Sainsbury’s. He had different plans for the firm and decided to bring a change in the management style. But wrong decisions such as reluctance to move into non-food retailing or the indecision between quality or value made the company go down. Problems such as increasing infrastructure costs, stronger and consolidated competition from other stores were starting to rise. The firm was not focusing on low prices anymore but more on the store look and supply chain improvements. Their market and share loss to Asda shows quite well that marketing mix is important to customers.

Macroenvironment

Political factors
Political factors are about how and to what extent the government intervenes into the organization. These interactions may include: * Labor law
* Environmental law
* Tariffs and quotas
* Political stability
* Tax policy
* Trade restrictions
For example, the fact of European Union extensions and new countries joining it, has an impact on the variety of products sold in Sainsbury’s. We can now see some foreign products as Polish beers or Cypriot yoghurts sold in the local...
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