How Sainsburys have adapted to their business environment Essay Example

to suit changing consumer tastes such as exotic fruits, reduced fat products etc. Its strategy of innovation also utilised the development of technology through computerised stock control, in store scanning and sales ordering, all of which enabled the company to gain a competitive advantage and become the number one food retailer in the UK.The company is the third largest food-retailer in UK and has a share of around 16. percent of the total market.

The company after leading the UK food retail market for decades faced a downfall during the 1990's. At present, the company is trying to retrieve its position in the UK market and expand its global market share. Sainsbury’s is a public limited company registered in the London Stock Exchange and FTSE 100. It is one of the leading UK food retailers and had been part of the financial and property sector.

Sainsbury's started with the fresh foods and later enter the market for packaged food products.It mainly focused on the dairy products, however, it was the first retail food chain to improvise, petrol stations, fresh food and poultry counter in their retail stores. Sainsbury's was among the first few organisations, which hired women employees during the World War, since most of their male employees had to be there in the war front. They develop a separate and exclusive training programme for their women employees who will help them work effectively in this new environment. Since early period, Sainsbury's built in the concept of departmentalisation in its stores.

Its early food stores were divided into 6 departments, dairy products, ham and bacon, poultry and game, fresh meats, cooked meat and groceries. It was

an unique concept at the 1900's which shows its innovative thinking from its startup. A company's store location plays an important role in its business. In the case of Sainsbury's, it has always chosen a central position in the parade for a larger display and better connectivity to overcome the constraints relating to limited vehicles for home delivery.

It was the first retail store chain to bring in home delivery service in UK. All these strategies helped the business to grow and become a pioneer in its field. The organisation also pioneered in the self service supermarket in UK between 1950's and 1960's. The organisational upbringing of Sainsbury's has been pretty different from that of its competitor e. g. Tesco.

Unlike, Tesco, Sainsbury's relied on the family mode of business.The company went public in 1973; however, the major shareholding has always been within the family till 1990's when the major shareholdings by the family were divested following a strategic downfall, Following the diversification of the shareholdings in 1995, the major share holding is with QIA, a foreign investment company. Sainsbury's started its journey as a grocery chain aiming at producing quality goods at affordable price. The organisation's aim of producing “quality goods at affordable prices” can be treated as its market entry strategy. Low-pricing strategy is an integral part of the business-level strategy.

It helps the organisation enjoy a competitive advantage over its competitors. Low-pricing strategy aims at producing quality goods but at lower prices than offered by its competitors. the key challenge lies in structuring the cost in a manner that will help the organisation to enjoy a sustainable advantage following the low pricing strategy. In

regard to this scenario, Sainsbury's has developed a unique cost structure by developing close relationships with its suppliers and by irradiating the agents in between. Both these policies helped the organisation enjoy a cost advantage over their competitors.The company adapted the hyper-market policy during the early 1970's following its competitors.

The company operated this format of stores through bigger outlets (over 45000 sq. ft ) and varied range of products under the brand Sainsbury Savacentre. The supermarket (average of 34000 sq. ft) the hypermarket store format only differ in the size and the quantity of product variants offered by the two types of stores.

The company also followed the concept of convenience stores followed by the other food retailers like Tesco, The Cooperative store, etc.This store format is also be termed as local store and is meant for a local market, much smaller in size (between 2000-6000 sq. ft) with limited variants offering top-ups and go and grab deals. Unlike its competitors, Sainsbury's does not involve franchising. Tesco recently has planned to go for a franchising in order to enter further into this multi-billion dollar market of retail groceries.

Its considering the franchising scope followed the step taken by its French competitor Carrefour. Franchising will help Sainsbury to reach a broader customer base and reach further corners which is no possible through direct acquisitions and mergers.Further, acquisitions involve managerial constraints which can be easily avoided in case of franchising. In line to the discussion Mergers and acquisitions it can be rightly pointed out that the company is rightly catching up the growing model of business UK and worldwide.

Its acquisitions of Bell supermarkets which operate

in north east England and a merger with Shell stations will help it to grow the number of convenience stores and petrol stations in UK. The company went for a merger with Shaws Supermarket Inc. a leading super-market chain in U. S and later acquires the company accompanied by its acquisition of Star Markets.

These acquisitions have helped Sainsbury's to control competition in the foreign market Sainsbury has started providing financial services through Sainsbury Bank which is joint venture between Sainsbury and Lloyds Banks. Its property management team is helping its property management business to reach new heights. The company has started diversifying its portfolio and its activities bt it will take time in attaining the aimed success. Sainsbury is the UK's third largest food retail chain trailing behind Tesco and Asda.Tesco was the pioneer in offering the customer's several facilities like customer rewards and club points which were previously unheard of. It introduced in internet shopping for the customers that help in growing the business and building up its brand image among its customers.

During 1980's and 1990's it went through couple of successful takeovers including that of William low, a Dundee based firm competing with Sainsbury. In 1997, Tesco also went into a business alliance with esso in order to get a lease of its several petrol filling stations.In July 2001 Tesco became involved in Internet grocery retailing in the USA when it obtained a 35% stake in GroceryWorks. In 2002 Tesco purchased 13 HIT hypermarkets in Poland. It also made a major move into the UK convenience store market with its purchase of T & S Stores, the owner of 870 convenience stores

in theOne Stop, Dillons and Day & Nite chains.

Tesco and Sainsbury growth structure mainly differs. Tesco has mainly focused on the growth through takeovers, acquisitions and mergers on the other hand; Sainsbury's growth was mainly based on organic growth.Growth through takeovers, acquisitions and mergers has helped Tesco to gain better and more market knowledge, technological knowledge and management knowledge. Whereas, organic growth for Sainsbury's has taken through a longer period of time, it can be concluded that Tesco and Sainsbury's have some structural similarity. On the lines of structural strategy, it can be concluded that Tesco follows a more diversified activities by using several variants like, Express, Metro, superstore, Extra and Homeplus which helps them to reach larger number of customers with different kinds of variants.

It can be said Sainbury's has several strategical differences with its leading market leaders Tesco and Asda, however, it has started working on its set back and is currently responding to the organisational and social needs in a better way. On analysing the retail food market and the activities of the major market leaders, it can be predicted that Sainsbury's will enjoy a fast and steady growth following the path of organisational mergers, takeovers and most recently franchising. All these will help Sainsbury to grow at a faster pace.