Company Background: J Sainsbury PLC owns 557 supermarkets and 377 convenient stores across UK.

the comapny was founded by J Sainsbury in 1869 and still remains the family controlled company. It also owns the Property Joint ventures in collaboration with Land Securities Group PLC and The British Land Company along with Siansburys Bank in partnership with Llyods Banking group. The Company is known for providing quality foods at fair prices with sustainable and responsible business approach.It is known for the fresh, safe, healthy and delicious food. The company believes in the philosophy of striving hard to be innovative and cater to their customers' needs in best possible manner. It deals with around 21 million customers every week. It is UK's 3rd largest Supermarket chain with more than 16% market share. It employs around 150,000 employees and offers around 30,000 products. They provide on line delivery shopping service covering around 93% of UK House hold. Their large stores provide non food offerings and other supplementary services (Anonymous, 2011 Annual report). SWOT analysis: Strenghts: 1. The diversified businesses i.e banking and fuel pumps. 2. The company has sound relationship with suppliers. 3. The company is known for its quality since long time which gives them good brand image. 4. Being 3rd largest retailer with aound 21 million customers transacting per month hows that they have strong customers base. 5. Their own brands could be their strengths. Sainsburys was once the first retailer to introduce their own wine brand. 6. The company has its legecy of nearly two centuries. Most of the products like poultry, eggs and milk is sourced from Briton. The considerable stake is held by Sainsbury family which makes it British Company in litteral sense. 7. It offers wide product range including food and non fodd items. 8. The division of property management helps sainsburys decide on finding, acquiring and developing best places to grow stores. 9. Existing stores with ample parking space and pleasant ambience gives them an edge over rivals. 10. Fair trade sourcing, ethical HR practices, strong CSR wing and quality staff are strengths of Siansburys. Weaknesses: 1. Tesco outperforms Siansburys when it comes to online grocery shopping with 52% of market share leaving Sainsburys only 17%. 2. It lacks innovative and proactive approach. Thecomapny couldnt comeup with the low price agenda instead it has had to react to the rivals- Tesco and ASDAs move of price drop by providing coupons to the customers to match up with the rivals prices (Smithers, R 2011). Even their recent switch to the tagline live well for less shows that it has been adopted from ASDA and Tescos strategy to be Value for money. 3. It is found that prices at Sainsburys of around 35 products like wine, butter, cheese and own brands have risen by 5% according to Fianancial mails survey (Craven N, 2011)

Opportunities: 1. Online sales is less explored selling channel used by retailers. It is expected grow by 15.6% pc per year. The rsearch indicates that around 62% britons have shopped online. The UK is the biggest online shopper in Europe with 43%(Anonymous, 2011 How much food). The research group IGD forecasts that online sales is going to increase to 9.9 billion by 2015(Telegraph, 2011). 2. Foreign investment opportunites especially through expansion particularly in china and india. 3. It has been predicted that there will be a rise from 125 billion in 2009 to 145 billion in 2014 in the food retail market segment (Euromonitor, 2010). This is mainly due to the fact that even during times of recession, food retail is the toughest segment since having enough to eat is the priority. 4. Resession is regardeas a threat. However, the positive aspect of recession is that the customers eat out less and eat more at home which provides opportunities for grocery retailers like Tesco to increase their output. It must be noted that food is the last thing that customers will cut back on. The percentage of overall consumer spending on food has risen considerably over the years, as shown below (Euromonitor, 2010): Threats: 1. Environemntal threats like early arrival of snow could hamper the sales especially in country like UK. Last years early snow fall had hit the retailers badly which observed 10% less people shopping in the first three months of December (Telegraph, 2010 ). 2. Economic factors are a matter of concern for Sainsburys since they impact directly on the buying behaviour of customers. Although the UK economy was declared officially under recession in 2008, the governments substantial reduction in interest rates helped to minimise further rises in unemployment during 2009 (Euromonitor, 2010). As a result of this, the spending power of consumers is again on a steady rise as they are more confident about their current financial situation. However, there is still a lot of financial uncertainty meaning that consumers are likely to spend less on premium products, encompassing organics and ready prepared meals, which will adversely affect both sales value and margins. Porters Five forces analysis: In order to analyse the competitive environment of Tesco, Porters five forces analysis has been used by the researcher as follows: Threat of substitute products and services y The threat of substitutes in the grocery retail market is considerably low for food items and medium to high for non-food items. y In the food retail market, the substitutes of major food retailers are small chains of convenience stores, off licences and organic shops which are not seen as a threat to supermarkets like Sainsbury that offer high quality products at considerably lower prices. Moreover, Tesco is further getting hold of these shops by opening Express stores in local towns and city centres creating a hurdle for these substitutes to enter the market. y However, the threat of substitutes for non-food items , for instance clothing, is fairly high. It should be noted that so long as the economic recession prevails , customers will be inclined towards discounted prices hence Tesco is a threat to the speciality shops. Threat of entry of new competitors y The threat of entry of new competitors into the food retail industry is low.

It requires huge capital investments in order to be competitive and to establish a brand name. Major brands that have already captured the food retail market are Tesco, Asda, Sainsburys and Morrisons and they account for 80% of all shopping in the UK (Mintel, 2010). Therefore, new entrants have to produce something at an exceptionally low price and/or high quality to establish their market value. y Gaining planning authorisation from local government takes a considerable amount of time and resources to establish new supermarkets and this is therefore a considerable barrier to new entrants. Intensity of competitive rivalry y The intensity of competitive rivalry in the food and grocery retail industry is extremely high. y In rural areas where the nearest superstore can be some distance away, some primary consumers are attracted by retailers like Somerfield and Co-op . y Hard discounters like Aldi and Lidl have taken over the market in times of recession. During 2008 they recorded a growth of sales of over 25%. y Tesco, the U.K.'s biggest retailer by sales, saw its market share rise from 30.4% for the same period last year. The nation's second biggest retailer, Asda Group Ltd., saw its market share rise to 16.9% in the 12 week period from 16.8% a year earlier. J Sainsbury PLC remained in third spot with a market share of 16.3% over the 12 week period from 16.1% a year earlier, according to TNS. William Morrison Supermarkets PLC saw a jump to 12.3% from 11.8%, according to TNS, which monitors the household grocery purchasing habits of 25,000 demographically representative households in the U.K. The discount retailers -- Aldi, Netto and Lidl -- have a combined market share of 6.1% compared with 6.2% a year earlier (Tesco, 2010). y Most customers visit Tesco, 25% regard ASDA as value of money, Waitrose wins the game in ambience and quality with 29% of people viewing it so whereas 21% called waitrose their favourite shop ().
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Bargaining power of buyers y The bargaining power of buyers is fairly high. y In cases where products have a slight differentiation and are more standardised, the switching cost is very low and the buyers can easily switch from one brand to another. y It has been proposed that customers are attracted towards the low prices, and with the availability of online retail shopping, the prices of products are easily compared and thus selected. Bargaining power of suppliers y The bargaining power of suppliers is fairly low. y It should be noted that the suppliers are inclined towards major food and grocery retailers and dread losing their business contracts with large supermarkets. Hence, the position of the retailers like Tesco, Asda, and Sainsburys is further strengthened and negotiations are positive in order to get the lowest possible price from the suppliers.

Sainsburys from strategic point of view: Sainsburys mission statement underpin the goal to provide healthy, safe, fresh and tasty food at fair prices. The companys current tactics could be summarised as: 1 Active prperty management 2 Great food at fair pricces 3 Growing supermaket space 4 Reaching Customers trhough additional channels 5 Accelerating the growth of complementary non food ranges and services The environmental analysis shows that Sainsburys strategy is to provide quality at fair prices. The company has recenlty switched to new strapeline live well for less is an attempt to have a cost differenciation. However, on the contrary their prices have risen by 5% recently. Their attempt to outperform rivals by launching coupens to make up the price diffrence does not go in line with their strategy. Though their foucs on non food items help them diffrenentiate themselves, it still ignores the fact that consumers are more willing to cut on the nonfood items and spend on food items to survive the hard times. Their imitative responses to the rivals strategy is making them lose competatvie advantage to the rivals. It is recommended that Sainsburys make most of their strenghts like space available, brand image, variety, legacy etc to overcome the weaknesses. It is recommended to adopt cost advantage strategy using the resources and capabilities. The companys strtaegy at different with the environemnt and also with what they claim since people dont regard them as great value for money. Refferences:
y y Anonymous. (2011). Annual Report. Available: http://www.jsainsbury.co.uk/media/171813/ar2011_report.pdf. Last accessed 20th August 2011. Anonymous. (2011). How much food do Britons really buy online? in graphs .Available: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8374076/How-much-fooddo-Britons-really-buy-online-in-graphs.html. Last accessed 25th Oct Telegraph. (11 Mar 2011). Online grocery sales 'will double within five years' . Available: 11 Mar 2011. Last accessed Jully 2011. Telegraph. (2010). How-retailers-are-faring. Available: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8221519/Christmasshopping-how-retailers-are-faring.html. Last accessed 20th August 2011. Rebecca Smithers. (2011). Sainsbury's steps up supermarket price war.Available: http://www.guardian.co.uk/money/2011/oct/12/sainsburys-supermarket-price-war-money-offvouchers. Last accessed 20th Oct 2011. NEIL CRAVEN. (May 8, 2011). Prices at Sainsbury's soar 5% in six months. Available: http://docs.newsbank.com/s/InfoWeb/aggdocs/UKNB/137235FD4C2C4D70/0EFEA93D9C98539 8?p_multi=DAMC&s_lang=en-US. Last accessed 2nd oct 2011. Euromonitor (2010), Industry Profile Food retailing, Euromonitor International, 2010 Mintel (2009), Food Retail Industry Including Online, Mintel Research Anonymous. (2010). Tesco share news. Available: http://www.advfn.com/lse/ShareNews.asp?sharenews=TSCO&article=41054419&headline=tesco -uk-grocery-market-share-up-at-30-5-12-weeks-to-dec-27. Last accessed 02 Nov 2011 BBC. (2011). Watchdog Report . Available: http://www.bbc.co.uk/watchdog/consumer_advice/supermarket_vote.pdf. Last accessed 02 Oct 2011.

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