Sainsburys changing the future
Sainsbury’s- Changing the Future Introduction 1.1 Recently Sainsbury’s has found itself in a sorry position. The store, once the number one supermarket in the UK, and the darling of the middle class, has moved to third position, and is even under threat by Safeway, who are planning to take over Morrison’s (www.guardian.co.uk/supermarkets). If the merger goes through, Sainsbury’s will fall to fourth (and last) place among the UK’s most popular supermarkets. Recent news has highlighted Sainsbury’s recent failings: ‘J Sainsbury continues to lose market share to rivals Tesco and Asda, according to the latest data from market research group TNS’ ( www.money.telegraph.co.uk /money) ‘J Sainsbury’s’ non food strategy in disarray as non food head Keith Evans leaves. Industry claim Sainsbury home ranges are too expensive… supply problems.’ (www.business.timesonline.co.uk/) ‘Egypt failure…opened 100 stores...100 million pounds invested…losses of 10 million in the first year admitted’ (www.mafhoum.com/press3) ‘June 13 2003…removing 1000 positions’ ( www.guardian.co.uk/supermarkets) ‘ Sainsbury’s share holders unhappy after disappointing sales during summer and Christmas…market share fell to 16.1% in just 12 weeks during September’ (www.news.bbc.co.uk/iow/business) ‘Sainsbury’s fashion designer Jeff Banks leaving…claimed “Sainsbury’s has a real lack of ability to retail clothing”’ (www.news.bbc.co.uk/iow/business) ‘7/1/2004- Sainsbury’s depot workers strike…750 members in Merseyside…staff angry at current £5.75 per hour…called for help of the union’ (www.news.bbc.co.uk/iow/business) Context Situation Analysis Industry Context 1.2 The three graphs show Sainsbury’s current position in the UK market as opposed to the rest of the supermarket industry. (Reference:www.guardian.co.uk/supermarkets). 1) Tesco is the current number one supermarket in the UK. Its market share fluctuates between 26 and 27%. It owns 979 stores, 730 in Great Britain. It has 265,000 employees, 200,000 of them in the UK. It commands a £25.7 bn turn-over. 2)Asda/ Walmart are at second position with 17% of the market share, and 258,000 employees in the UK. No information is currently available on combined turn-over of Asda and Walmart. The company is big on non-food items, and Asda’s George clothing range is popular, a success. 3) Sainsbury’s is in third place, its current market share between 16.1 and 16.2%. Sainsbury’s has 463,000 employees with 185,000 in the United States, under Sainsbury’s American brand, Shaw’s. It has £18.2 bn turnover. Focuses on quality. 4) Safeway has a 10% share, with 480 stores and 174,000 employees. Its turnover is currently £9.4 bn. Its current strategy has involved bidding for Morrison’s. 5) Morrison’s, a Northern chain, commands a 6% share of the market and a £3.2 bn turnover. It owns 119 stores. Competitors include the big four, mentioned above. Other competitors include smaller stores, and small grocery stores. Customers perceive other competitors as cheaper, and better at producing non food items.