Sainsbury: The Retail Industry

Categories: BusinessFoodIndustry

Sainsbury’s are part of the retail industry which selling products into the lifestyle and retail sector. Their marketing message is ‘Good Food Costs Less at Sainsbury’s’. they are known for selling good quality products at a low price –with varieties to offer. Their target group is to do with household’s items and food. Sainsbury’s is one of the oldest super market chains in the UK. It was founded in London in 1869 and is the 3rd largest supermarket chains in the UK with 15.

8% market share.

Environmental:

Political: political factors have a big impact on any business trading from the UK and this includes Sainsbury’s. for the government the debt is very high and this is also the same for consumer’s debt as well. The high debt is shown by how it impacts the customer’s attitudes and a for a business customer attitudes are a very important factor in the success of their business which constantly put them under pressure.

Sainsbury’s as a big company has to operate their business is this type of market and the conditions it has but they also have to be constantly have to be thinking of new ways to develop their business to increase or keep the level of customers they have and to keep persuading their customers or potential customers to shop in Sainsbury’s stores. These political factors are not the best for Sainsbury’s but they still manage to keep a steady growth, which is due to the fact of their reliability to offer good quality products which they are continuously at a competitive price, competing with other large supermarkets.

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Sainsbury’s have recently put their hourly pay up for all of their employee’s no matter the employee’s age. Everyone is now on ?9.20 no matter the job you do

-Tax how Sainsbury’s tax you how Sainsbury’s get taxed:

Trading communities:

Economical: economic factors will effect ant business, small or large. Economic factors affect demand, cost, price and profitability. Growing unemployment and inflation in food prices are the two most important factors that will effect Sainsbury’s in a significant way. If there are high unemployment rates and the prices of products are high the demand for Sainsbury’s products will decrease leaving their profits low, there for they will not being buying as much from factory’s meaning production will also decrease and by this happing this will lead to food prices having to increase to make any sort of profit at all and it will also effect the unemployment rate due to factory’s not needing to employ as many worker as they are not needed.

High interest rates will affect all businesses but they will especially effect small businesses as they often have a limited cash flow. When interest rates rise businesses most often small businesses will set aside an amount of money to repay their loan and or other debts they may have. This will then affect the running of the business because all the money they have will not be going on to improve their business as it will have to be spent on other things and this can affect your earnings as customers may feel that your business is not offering anything new or anything to persuade them to shop at your store. Now Sainsbury’s is not a small business so high interest rates will not affect them in such a dramatic way but it still will affect them.

Inflation is where there is a general increase in prices and a fall in the purchasing value of money. Due to Brexit and the uncertainty that it will bring Sainsbury’s have warned of an ‘uncertain’ impact on prices as the pound is constantly falling and then recovering. As Sainsbury’s did report ‘like for like sales and profit in its half-year results. Sainsbury’s reported a 1% decrease in like for sales, in the six months to September.

Booms, recessions and inflations

Social: trends, staying on top of trends in this day and age potential customers would rather go to a ‘one-stop shopping’. This is where a retail has all the desired products under one roof. Sainsbury’s have adapted to this by introducing non-food products to widen their audience which will increase their profit. Another social factor would be the increase in obesity in the UK. In 2014 62% of adults in England were classified as overweight or obese, compared to 53% 20 years ago. More than two-thirds of men and nearly six in 10 women are overweight or obese. Sainsbury’s have tried to help tackle this problem by making sure the products they are selling are also trying to help with the obesity problem and they also offer a wide variety of the same product so people have an opinion to look for a healthier alternative of the same thing. One trend that Sainsbury’s are following are ‘Cook and Save’, this promotes easy to cook products which are also at a reasonable price to make their customers monthly household budget stretch as far as possible.

Technological: onlne presence, contactless payment, online process: advancement in technology can help improve any business due the amount of potential customers it can reach and also it can be easier way to for customers to buy your products and customers like to find the best and easiest way possible go purchase products. This means that there is a significant growth potential in the online or web for a business to take advantage off. Sainsbury’s have an online food delivery service is increasingly their profit. ‘offered online has resulted in increase of sales by 25% year after year’.

Law: the legislation and policies the government has a lot of involvement in how a business goes about running of their business. Examples can be legislation that is to do with fatty foods as there is a big trend in the UK at the moment of trying to keep fit and health as the obesity is on the rise in UK. So what the government do is set a tax on certain products that are conceded as very fatty. Sainsbury’s also have to make sure that they are following the right laws that affect them and also that they are paying the right tax. They also need to make sure that they are following the strict food laws out that are to do with things such as:

food import and exports

safety

traceability

labelling and product withdrawals recalls

minimum wage law

EU legislation:

for traceability of food

for presentation of food

provision of suitable food information

for the withdrawal or recall or unsafe food placed on the market

to ensure food and feed imported into, and exported from, the EU shall comply with food law

Sainsbury’s will have to change its way it runs and will have to have regular checks to make sure they are following all these requirements.

Environmental: in this day and age people are very environmental friendly and like to look after the planet as much as possible. Even though there is still a long way to go to being completely environmental but there is a lot a business can do help with the fight to be eco-friendly. Organisation impacts the environment in both direct and indirect way’s. Sainsbury’s are helping with this by doing a programme called ‘Reduce, Reuse, Recycling’. They are also working to reduce their operation carbon footprints. Sainsbury’s are going to release a new line of food which will be ‘Bugs’ as they are full of goodness and as there are millions of them. Here Sainsbury’s are thinking about the environment and the more increasing worry that in ’50 years’ time’ there won’t be enough animals on the plant compered to humans and the mount of animals there will be will not be enough to feed the plant so they will have to live a more vegan lifestyle to be able to live.

Strengths:

Sainsbury’s is one of the largest supermarket chain in the UK

Sainsbury’s has an employee strength of over 150,000 people

They have an extremely experienced leadership team

They very good at branding and advertising across the UK through the TV, print ads and online campaigns.

The company is listed on the London stock exchange.

Sainsbury’s have over 600 supermarkets and over 800 convenience stores across the UK.

There are more than 1400 Sainsbury’s grocery stores in the UK which employ more than 150,00 people.

Weaknesses:

rising food prices over the world have impacted on Sainsbury’s as they will have to set their prices at a high price to insure that they are making some sort of profit to keep their business running. This will then impact the people as their prices may be too high for them to purchase.

Sainsbury’s competition within every segment of the retail sector, this means that Sainsbury’s competition such as (TESCO, ASDA, LIDL’) are selling similar products as you at a similar price meaning there is less incentive for potential customers to come and shop at your store.

Opportunities:

Sainsbury’s can go into the market for emerging companies through joint ventures or partnerships to explore different types of new markets, such as Sainsbury’s have recently bought Argos so this means they have more of a wider audience to sell to.

Sainsbury’s are commonly using self-checkout machines by making 24 hour Sainsbury’s stores with self-checkouts may help increase sales, as there aren’t many stores out there that are open 24/7.

Currently at the moment Sainsbury’s is a UK based business that commonly trade within the EU but to widen their level of sales they should start having pop up stores throughout different countries in the EU and if this is successful then they should consider trading with the wider would such as Africa, Asia’ or opining pop up shops in these countries as well.

Threats:

Sainsbury’s promote themselves to be one of the best for value for money but also high quality products meaning they have to source the best products for their customers and they constantly have to check what their competitors are doing and make sure they are beating them but then they have to make sure they are balancing this out with their prices because they don’t want to set a price that is too low just to beat their competitors.

Competitors:

These are the type of businesses that Sainsbury’s are in the same market as, so they have too constantly been making sure they are keeping up with their competition, they can do this by watching closely the kind of market moves they make such as how low or high they set their prices and what sales they are doing. These are also Sainsbury’s competitors because they sell a lot of the same products as each-other, this results in the customer been unsure what super market to shop at as there isn’t really a lot of difference between the them all. It just depends on the customer and their tastes, whether or not there looking for good quality products and are willing to spend that little bit more for it, often these types of shoppers will go to places such as Waitrose. But a lot of Sainsbury stores, especially the big ones have widened their market audience by not only selling food and drinks but to also sell home items to furnish a person’s home but also they sell thing’s such as clothes. This is an advantage to Sainsbury’s because it makes them stand out for their competitors as many off these stores do not sell home furnish items or clothing items, this could mean that there is more of an incentive for potential customers to choose your store over others.

ASDA

Tesco

Boots

Morrison’s

ALDI

Debenhams

Amazon

Waitrose

Competitive advantage

Situational analysis

Sainsbury’s internal and external influences (stakeholders):

Sainsbury’s operate mainly in three segments:

Supermarket and convenience retailing

Sainsbury’s Bank joint venture financial services

Property investment though British Land joint venture and Land Securities joint venture.

Sainsbury’s have a number of stakeholders they have to handle. An internal stakeholder for the company is someone who works for the company and therefore is interested in various of the business. External stakeholders, on the other hand is someone who is interested in the performance and other aspects of the business even though the individual does not work for the company. Sainsbury’s internal stakeholders can be external stakeholders of the company at the same time. For example, Sainsbury’s employees who also happen to be local residents are the type of individual who are internal and external stakeholders at the same time.

EU:

The EU (European Union) grew out of a desire for peace in a war-torn and divided continent. Five years after world war 2 their two countries would never go to war against each other again. The result was a deal signed by six nations to pool their coal and steel resources in 1950. 7 years later all the countries that wanted to be involved in the EU went to Rome and created the European Economic Community (EEC) which are still the foundations we use now in the EU; the UK was one of three new members to join in first group of counties of expansion in 1973. The EU today has 28 member states with a total population of more than 500 million. There are four key institutions which work together to run the EU the European Commission, the European parliament, the Council of the European Union and the Court of Justice. The UK contributes about 12.6% of the entire EU budget. Britain pays the third largest amount of money into the EU after Germany and France. But in 2017 the British government promised to hold a referendum on leaving or remaining in the EU. (Prime Minster David Camron was Prime Minister at the time and wanted Britain to stay in the EU and when the country voted and the result of that vote was to leave David Camron step down for the office). A lot of British citizens believe that the EU is holding the UK back and they also feel they contribute so much to the EU and get little in return and would be better taking back control of borders. A lot of people think that when the UK finally leave the EU that they will be worse off economically under all Brexit scenarios. Theresa may who is the current Prime Minister of Great Britain. She had to come up with a plan (deal) that she could take up with the EU but first it had to be agreed on in the British parliament.

Many businesses are already expecting changes in the labour market and currency effects. Cost and availability of certain supplies and goods may change substantially. Another way Brexit is going to affect your business is by importers and exporters may need to have measures in place which will make it harder to import things or may make it more expensive to import and export things. The supply chain may become affected by tariff and county of origin requirements where goods contain constituents from multiple sources, identification of country of origin rules may also change. Businesses will also have to deal with hard borders now as the free movement will stop so there will be a lot of border control’s they will have to go through and meet the requirements off. Rights holders will need to apply for separate UK trade mark/ designs as well as EU rights once the UK has exited the EU. The coverage of existing rights will change. The date set for the UK to leave the EU. For the UK to leave the EU it had to invoke article 50 of the Lisbon Treaty which gives the two sides two years to agree the terms of the split. Theresa May triggered this process on 29 March, 2017, meaning the UK is scheduled to leave at 11pm UK time on Friday, 29 March 2019. The EU is the world’s largest trading block and the largest trader of manufactured and services. If the UK was to remain part of the EU (which they cannot do as they are not allowed to go back on the vote that the public made). They say that British businesses would benefit from continued access to the single market and free trade agreements already put in place but there are benefits staying and leaving, while if you stay you get all the benefits from the EU but leaving again does also have its benefits as then the county will be to set their own laws on things the way they want and this leads to them being able to enter into trade deals that they would not have been able to do while staying in the EU.

How will leaving the EU affect Sainsbury’s:

Sainsbury’s chief executive has warned fresh food could be left rotting at the British border if strict customs controls for EU goods are put in place after Brexit. The UK face an unprecedented food crisis if it leaves the EU without a trade deal, the boss of the country’s second-largest supermarket has warned. Sainsbury’s would have to increase their prices if any barriers to imports were introduced after Brexit. Sainsbury’s have warned that the impact of cost pressures from the post Brexit vote decline in the pound remains uncertain as

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Sainsbury: The Retail Industry. (2019, Dec 02). Retrieved from http://studymoose.com/sainsbury-the-retail-industry-essay

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