INTODUCTION& BACKGROUNDSainsbury is a UK based company whose core operation is retail business in food and non-food products and services. It is one of Britains largest retailer shop that deals in food and wine.Founded in 1869 by John James Sainsbury.Has 141,000 employees and has a sales of 23.2 billion pounds sterling.Sainsbury has continued to build more retailing businesses which has profited them (Company History).
Their grocery business had a return growth in 2016/17, with a turnover of 0.3% higher in the year ended March 2017.The sales were 0.6% lower and driven down by the lower sales in the supermarkets, which was the bulk account for the company, s store-based sales.It was a good performance done by the online side of the business in which the sales grew by 8.2%.Sainsbury’s has also been losing shares in the recent years and sales have gradually been shifting from store to online.
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It does not have many larger stores compared to Tesco and ASDA and makes it less affected by the switch back to doing smaller shopping in convenient outlets (Mintel, 2018)LITERARTURE REVIEWMETHODOLOGYAccording to (Sainsbury)there are five pillars that helps with their business stsratefgy Their value makes them differentTheir values helps strengthen the relationshis with their customers, suppliers,collegues and also making commercial sense.They are committed to their suppliers and take responsibility for the communities which encourages them to be more innovative. Sainsbury’s sustainanbility plan focuses on where they can make the most positive impact.Colleaugues making the differenceSainsbury encourages their colleagues to expnd their skills through taking initiatives and motivating female colleagues.They were also awarded three ‘Gold’ accreditation by Ivestors in people for supporting and motivating their colleagues.They make their products and services great at a fair priceThey make their food affordable for everyone. They are also building banking business to suit customer future needs.
This focuses on the quality, provenance and sustainability that reassures customers that they made the right decision.The acquisition of Habitat and Argos helped speedup their strategy. Sainsbury created multi-products, multi –channel business with a fast delivery process.They are there for their customersSainsbury has made online shopping for flexible for their customers, expanding their convience store network and supermarket. With help od Argos and Habitat, customers are served quickly whenever and wherever they want to shop. They opened 60 argos didgital stores in Sainsbury’s markets and are planning to open 200 more.They know their customers better than anyone elseSainsbury understand their customer and do everything they can to please their customers and make sure they are satisfied with their services.
They have face-to-face, telephone and online conversations to listen to the views and feedback of their customers. This gives them ideas of the the customers value and how they can serve them better. The better they know theirs, the more they can prvide them with new products and better service..Strategy(UK essays.According to (UK essay), Sainsbury works in partnership with their key stakeholders, including Government, NGOs as well as their collegues and customers to help fibd solutions. They involve the stakeholders to make sure they undertand the issues at hand.
They conduct research that helps identify customers concerns. Sainsbury review issues that can harm harm the businesss ans set a contingency plan to prevent such issues. They report the process to those in charge.They also ensure that future challenges are addressed and try to find solutionsTargetsThey are focused on having committed custoomers. Making them review tprevious targets and activity. Figuring out a way to improve their services.They implement strategies that help improve their business.
The company relies on 150,000 colleahues to help deliver great services to their customers every single day. They focus on diversity, equality, inclusion and flexible working patterns for their colleagues. They believe and encourage their collegues.Their colegues are motivated because their opinions are vakued and heard.They also believe in rewarding their colleagues when a good job has been done.This makes their workers work extra hard to be noticed.3.
0 SAINSBURY MARKETING ANALYSIS3.1Sainsbury Pestle Analysis(uk essays)Political factorsPolitical factors have a big influence on Sainsbury.It being one of UK largest retail industry market. As the government debts are very high. This has an impact on the attitudes of the customers and therefore putting pressure on the business. Meaning Sainsbury has to develop their business continually.But they have been able to susteain a steady growth because of their fair prices and great product quality.
Economic factorsThis plays a major role to the industry. They affect demand, supply, cost and profitability. The unemployment rae and the inflation in food prices have a major effect on Sainsbury. The demand for Sainsbury product will decrease bwhich will decrease their profits and slso decrease the production of food produce.Futhermore, increasing food prices and affecting those who cant afford to purchase.In order to prevent this, they expand their market.Social factorsSainsbury has really benefited from from introducing non-food products also.
They have focused on diversity and increased the female work force.They have been able to provide their customers needs with all type of products.Technological factorsSainsbury online business had made a positive impact on the business. These online operations helps the company to expand their capacity in areas of potential growing demands. As at 2009, sales has increased by 25% year after year from the services offered online. This service is available to 88% of the UK households.3.
2 Sainsbury SWOT AnalysisStrengthHigh Inventory Turnover Ratio. Sainsbury reported to have a high inventory turnover ratio of 22.6 compared to the previous year. Their inventory turnover was higher than its competititors, giving them a competitive advantage. The company took 16 days to sale its ivnetory as compared to 89 days by Home Retail. By reducing the inventory turnover days and increasing the inventory turnover, the company was able to reduce their carrying cost that help improve the performance.Multiple Channels Selling StrategySainsbury has lots of convience stores, supermarket ans online business formats.
The company has 1,304 stores with the retail space of 22.8 miilion square feet, also 597 supermarkets with retail space of 21.2 million square feet and 707 convience stores with a space of 1.6 million square feet.They also have an advantage in brands awareness.WeaknessesDeclining Financial PerformanceIn the year 2015, Sainsbury revenue dectreased to 23,775 milion pounds sterling as compared to the previous year which was 23, 949 million pounds sterling. Having an annual deciline od 0.
7 %. This was due to the reduction of sales by 2% in 2015. The decline in the retail sales was due to 1.9% decrease in like-for-like retail sales. In 2015, J Sainsbury reported operating income of 81 million pounds sterling as compared to 1,009 million pounds sterling in 2014. The decline in the operating income was due to increase in the selling and administrative expenses from 444 million pounds sterling in 2014 to 1,132 million pounds sterling in 2015.It reported net loss of 166 million in 2015 as compared to net income of 716 million pounds sterling in 2014(J.
Sainsbury, 2016). Sainsbury did not fully use the opportunity to ggrow nad maintain a lead in the market share. Tjey took long to make new changes and develop strategies. They also had issues with the inventory management and supplychain amangement which suffered them a loss. They haven’t invested enough in China because they did not understand how the operating environment work (Writepass).OpportunitiesGrowth of E-commerce in the UKThe company focuses on strengthening the presence of e-commerce to increase its revenue. The online retail marjet in the UK is expected to grow at CAGR of 8.
7% during the year 2013-2018 ,despite the economic condition, reaching a sales of 55,280.3 million pounds sterling according to in-house research.The company has taken initiatives to strengthen its online busibess. The company introduced a clotheing website for its clothing brand and had a digital magazine sevice that made its customers access more than 1,000 titles online. This gave them an advantage over its competitiors.Expanding Retail Market in the UKSainsbury has greater advantage over its competitors by expanding the retail market. The company invest 947miilions pounds sterling for opening new stores and renovating the existing ones.
101 stores were opened including 96 convinece stores and five supermarkets . They estabilished 15 Netto stores in the UK in 2015. It was also announce that in 2016, 15 new Netto stores would be opened. Expanding Sainsbury business in the UKThreatsExpansion by CompetitorsCompetirors has always been an issue for companies especially is their rivals are producing the same producets as the company and has better resources and good management. Sainsbury faces fierce competition form bith the international and domestic companies in the retail industry. Too much competition sometimes forves the company to reduces its selling price and also incease their product differentiation which also increases production cost.Tesco, ASDA and Lidl are major competitiors for Sainsbury.
Tesco opened a bakery business which made it have an advantage over Sainsbury. Also Lidl opened new stores to expand its business in the retail industry. Looking at the Market Share, Tesco and ASDA comes before Sainsbury(J.Sainsbury, 2016) Food Contamination.Food security is also a major issue in the food industry. If the food produce are not well stored, they can be contaminated. Foods that are not well pacajged or well sealed, are prone to bacteria.
Especially when the food is imported like poultry or livestock. These food can easily be contaminated if there is an outbreak. Diseases such Avian Influenza and swine flu can affect pork. And some customer who aren’t aware will buy the products and start to feel ill which eads ro food poisoning or an upset stomach.This can tarnish the repuatation of the company. They can also lose customers from this incident.Competitive rivalryThe market share of food market in the United Kingdom is concentrated.
It is dominated by 4 major players namely Tesco Plc, Sainsbury, Safeway and ASDA with a combined market share of 70%.As per the annual report of 2009, Sainsbury has a national market share of 16% and its web based shopping service captures 88% of UK households.Tesco Plc and ASDA Group Limited are the 2 major competitors of Sainsbury in the United Kingdom. Sainsbury’s competitors have certain competitive advantage such as focus on price and value and quality service.The competitive advantage of Sainsbury has been increasing attention to quality within their own-brand products and competitive prices.Barriers of entryThe food retail industry in the United Kingdom has significant barriers of entry.As the target food market in the country is huge, the foremost issue for a new entrant is the large scale of investment required to enter and face the competition from established key players like Sainsbury, Tesco, Safeway, etc.
The established competitors not only pose tough competition to new entrants in terms of market share but also have their own branded products. A new entrant would have to invest substantial time and financial resources to develop and promote its branded products.Threats of substitutesThe threat of substitutes being available in UK’s food market is not a dominant issue. Unlike other products, food products come under the category of necessity. Therefore the demand for food products is ever-growing as the market evolves.Although there is an inherent internal threat such as a presence of another supermarket in the same demographic limits, the competitors are constantly bringing in innovative ideas and ways to make food shopping a pleasurable experience. A good example is the internet based shopping service provided by Sainsbury which allows 88% of the UK household customers to shop conveniently at the click of the mouse.
Power of buyersIn a competitive retail food market in the United Kingdom, the power of buyers plays a very significant role. The power of buyers can determine the prices of products, the market share allocation, customer loyalty, etc.For instance if the price of milk which is a necessity product, is high in Safeway, the customers will switch to Sainsbury. As there are several supermarkets in the region, the bargaining power of the customers is very strong and the customer loyalty is very volatile.Sainsbury should constantly assess its prices and benchmark it against the main competitor’s prices in order to be competitive in the market.Power of sellersThe power of sellers refers to the demand of the suppliers that the retailers and the supermarkets should pay a definite price for their goods. If the retailers are reluctant to pay the price demanded by the suppliers, the products will not available for resale.
This in turn will affect their customer service as the retailers will not be well-equipped to provide a wide range of products to its customers.Being a large chain of supermarkets and convenience stores, Sainsbury has an added advantage of determining the terms and prices of products from their suppliers. In addition Sainsbury has a large base of its own branded products therefore Sainsbury sho uld focus on developing marketing strategies to expand their client base and demand for their own products.CONCLUSION ; RECOMMENDATION