Disclaimer: This is an example of a student written essay.
Click here for sample essays written by our professional writers.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com.

Sainsbury's: Competition With Other Supermarkets

Paper Type: Free Essay Subject: Business Strategy
Wordcount: 3359 words Published: 21st Jun 2018

Reference this

J Sainsbury: What will it take to make it ‘Great’ again?

Contents (Jump to)


Key Figures

Products and Services

Quality and Quantity





The food and grocery retail sector is the United Kingdom’s largest employer, supplying 11% of all jobs in the UK, totaling in excess of 2.8 million people (IGD, 2004a) in a market that generates £123.9 Billion in sales (IGD, 2006b). This traditionally British company dominated industry has been changed through the acquisition of ASDA by giant retailer Wal-Mart in late 1999, which then was the third largest supermarket with 229 stores and sales of £8 billion. Wal-Mart’s entry into the UK food retailing sector and their low pricing retailing concept sparked a round of ‘full-scale food price wars’ as it embarked upon its strategy of gaining immediate market share increases (BBC News, 2001). This development represented a less than desirable market instance for J. Sainsbury’s, which at the time of the Wal-Mart invasion was number two in the UK market behind Tesco (BBC News, 2001).

Get Help With Your Essay

If you need assistance with writing your essay, our professional essay writing service is here to help!

Essay Writing Service

In fact, the troubles at Sainsbury’s were in progress before Wal-Mart’s entrance into the UK market as it lost its position as the number one food retailer to Tesco in 1995, and since ASDA’s acquisition by Wal-Mart the company has slide into third place (Food Business Review online, 2005). This examination shall seek to look into the overall United Kingdom supermarket industry as it relates to the large chains and identify factors acting upon as well as in it that have reversed the fortunes of Sainsbury’s from an internal as well as external standpoint. The question that said examination will endeavor to answer is “What will it take to make Sainsbury’s Great again?”

The aim of this examination is to delve into the market forces, conditions, competitive influences and impacts within the United Kingdom grocery retail sector to gauge what has transpired since Sainsbury’s occupied the number one position in the market and why it has been supplanted. The historical perspective will provide an overview of how the market has changed from a consumer, competitive and internal standpoint of Sainsbury’s marketing, and market strategic planning and thus attempt to identify what the company either missed or failed to respond to with regard to the conditions that resulted in its losing significant market share and thus its leadership position.

The objective is to uncover the salient and noteworthy market and competitive forces, inroads, developments and circumstances that enabled Tesco as well as ASDA to pass Sainsbury’s for the number one and two spots in the United Kingdom and what strategies, developments, changes and other factors which Sainsbury’s will need to consider and or implement to begin reclaiming significant market share.

Key Figures

As of October 2006 the Taylor Nelson Sofres study, which is also known as the TNSofres Superpanel, of the United Kingdom grocery retailing market showed the following (Answers.com, 2006) (Wikipedia, 2006):

Table 1 – UK Grocery Retailing Market Share 13 August 2006

Name of Chain

Market Share









Table 2 – UK Grocery Retailing Market Share 2 January 2005

Name of Chain

Market Share















The foregoing indicates how much Sainsbury’s has slipped since the early 1990s when it was the undisputed market leader. An examination of accounting data for the company and or its competitors indicates that there is noting in this aspects that affects or has affected the abilities of the firms to either operate or obtain an advantage. The importance of market share, translates into customer traffic, the all important variable in generating sales.

Products and Services

The change in the UK grocery retiling sector to a more price competitive structure eroded Sainsbury’s advantage the existed prior to 1995, and the resulting price wars heated up with Tesco responding to the Wal-Mart / ASDA discounting strategy along with Safeway and Morrisons, which Sainsbury’s failed to respond to when this development hit the market (Food Business review online, 2005). This important misstep compounded consumer defections and eroded market share. Sainsbury’s heavy investment in private label brands did not provide the needed hedge as the consumer market shifted away from this prior initiative as they started buying lower price brand names offered by competitors (TNS, 2000). Another important factor in the decreased market share, which is a function of low store traffic is that Tesco, ASDA as well as Morrisons built or expanded to larger stores thus providing them the opportunity to stock non-food items thus making their locations more convenient for one-stop shopping (Just Food, 2002). Sainsbury’s Savacentre format represented a subsidiary operation rather than a central format whereby it could not compete with the competitors’ number of stores in this format.

The trend of grocery retailers into non food areas was not just a Wal-Mart innovation, as Carrefour also had moved in this direction. One stop shopping represents convenience for consumers, and this along with loyalty cards, big stores and lots of extras are what today’s more demanding consumer looks for, wants and expects.

The preceding understandings as to the developments the occurred over time in the UK as well as in international grocery retailing segment are important to understanding not only what has happened to Sainsbury’s, but what it missed in terms of market developments and what it needs to concentrate on to return to its former greatness.

Quality and Quantity

Diversification has been the key to success for Tesco as well as ASDA in that their non-food items such as clothing, electrical items, appliances for the kitchen, soft toys and ceramics allow them to not only attract customers, it permits them to operate on lower margins in their food operations thus increasing the difficulty for Sainsbury’s (Food Business review online, 2005). The preceding diversification strategy represents the means via which Tesco as well as ASDA overtook Sainsbury’s, and thus indicates the path the company must take to not only hold its ground, but make up for lost customers. The preceding strategy permits these companies to offer a larger selection of items as a customer draw. The quantity of offerings represents a distinct advantage.

The qualities of products as well as the environment in which they are sold are important points in attracting customers as well as keeping them, and is equal among competitors. Sainsbury’s 2005 Annual Report recognizes the preceding as the company stated “Our vision for Sainsbury’s is all about delivering great quality food at fair prices.” (Sainsbury’s, 2005). The company is committed to the importance of the low price position with regard to the UK market and has made this a center piece in its restructuring strategy (Sainsbury’s, 2005). In recognition of the importance of customer convenience, the company is expanding its non food mix which “… includes items such as cards, gift-wrap, music and DVDs, and which for most customers are now a part of the weekly grocery shop” (Sainsbury’s, 2005). In this same vein, Sainsbury’s adds “Where space allows we will also sell clothing and home ware …” and continues “We see a clear opportunity to grow sales by developing our non-food offer …” (Sainsbury’s, 2005).


Key to understating where Sainsbury’s and the grocery retailing sector market is today, is understanding where it was yesterday and the events that led to the company’s decline. The supermarket wars are nothing new as are the minor developments that signal competitiveness. Price cutting discounters were in the marketplace as far back as the late 1980s, yet Sainsbury’s continued to gain market share in spite of this (BBC Online Network, 1999). Tesco’s successful bid for supermarket chain William Low in 1994 provided it with a presence in the Scottish market, but does not represent a singular event that aided in its surpassing Sainsbury’s in the marketplace. In addition, Tesco introduced a highly successful marketing campaign, as well as its loyalty card well in advance of Sainsbury’s, which helped it to improve upon customer loyalty and repeat store visits (BBC Online Network, 1999). Other developments included Tesco’s “… own label discount lines, as well as supermarket bank accounts (BBC Online Network, 1999). Correspondingly, Sainsbury’s 1994 Annual Report indicated that their prices were 3% below the other large chains (Sainsbury’s, 1994, p. 4), however this in and of itself did not counter Tesco’s more customer centric marketing strategies which increased customer loyalty and attracted new ones.

By 1995 it was official, Tesco had achieved the status of the number one grocery retailer. And while Sainsbury’s also operated Savacentre hypermarkets which sold a broad array of goods, including clothing, the company’s focus on expansion into the United States through its acquisition of the Giant food retailing chains and modest opening of 20 new U.K. stores ran contrary (Sainsbury’s, 1995, pp. 10-12) to Tesco’s focus of expanding in the large store multi product mix format in the U.K.

Table 3 – UK Annual Grocery Retailer Sales 1998 – 2000

(TNS, 2000)

% Share

Chain Name




















The SWOT analysis of Sainsbury’s reveals:

  • (S)trengths

The Sainsbury’s name and reputation represents a strong advantage and strength for this British company serving its domestic market as well as the fact that it has learned the lessons and importance of non-food items, larger stores and customer loyalty programs from the successes of its rivals which it has implemented in it restructuring strategies (Sainsbury’s, 2005).

  • (W)eaknesses

The company’s weaknesses are its lack of superstores to match the strength of ASDA and Tesco who are and have benefited from the increased number of non-food items these types of locations can carry and the lost customers the company must win back.

  • (O)pportunities

The well known format of pricing has been inoculated into the company’s structure through cost cutting and paring down personnel, thus putting it in the position to do battle on this front. In addition, the proven successful strategies in internal operations as well as winning customers as learned from rivals provides it with the position and structure to now attack these areas. Opportunities exist in the acquisition of key superstores from other smaller competitors as well as a strategic acquisition.

  • (T)hreats

Continued discounting, and new superstores by the company’s competitors represent its biggest threats as well as the potential acquisition of smaller chains by rivals to increase their store placements.

A Porter’s Five Forces analysis of Sainsbury’s reveals the following:

  • Rivalry

Tesco and ASDA hold market share leads over Sainsbury’s, and their size, strength and placements in the market provides them with a strong positioning that the company must not simply match, but exceed in order to gain market share from them as well as smaller firms. The high rivalry in the industry makes the preceding proposition difficult as the format is based on pricing for which there is little room to maneuver.

  • Threat of substitutes

The threat of substitutes is low as the extremely high cost of entry owing to real estate, store and other relationships rules out new players in the market except through the acquisition of existing firms. In addition the high degree of managerial savvy to operate in this environment represents another inhibiting factor.

  • Buyer power

Buyer power is strong in that the stores in this sector control to a great degree their supplier relationships through long standing agreements or out right ownership and control.

  • Supplier power

Supplier power is weak as a result of the number of competitive firms in the market all having long established existing relationships. Changing to new firms means an intense round of cost cutting measures to either replace or fit in with the chains supplier structures.

  • Barriers to Entry and Threat of Entry

The barriers to entry in this industry sector are represented by the extremely high cost of either starting up, acquisition and securing qualified management and store manager talent. The threat of entry is extremely low for the same reasons. In addition, the market is full of top line players thus making it improbable that an outside firm would be interested in entering this extremely tough competitive environment.


What it will take to make Sainsbury’s great again is the continued commitment by management and employees to surpass the service levels offered by its rivals as the company has already embarked upon the immediate and long internal, location and non-food formats that have proven successful for competitors. The all important ingredient in the entire strategy and marketing mix is the customer, as pricing and product mix are keenly watched, modified and adjusted by all competitors to either maintain parity or achieve it. Store layouts, modern designs, non-food items, convenience, location and size are all key aspects of the company’s plan as contained in its Annual Report to achieve market position gains by 2008 (Sainsbury’s, 2005).

Find Out How UKEssays.com Can Help You!

Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.

View our services

These things being equalizers in terms of the company putting its facilities and locations on a par with competitors is not enough, in and of themselves, as the key to the industry sector are its customers and their weekly shopping habits and needs. Sainsbury’s must forge an increased personal relationship with its customers in terms of product selections, quality, locations, convenience and deft utilization of customer relationship management to identify spending and shopping patterns and craft unique loyalty programs that respond to individual customer preferences, needs and desires. In an industry with little to differentiate one firm from another, the difference is in the interpersonal relationships and contact with a company’s staff that spells an advantage. Friendliness, personable, helpful and most of all key customer relationship management to present offers, are factors that appeal to customers.

Despite all of the investment in facilities, stock and the like, the grocery retailing industry is a service industry, as such is the most important front via which to attract, retain and increase store visits. All of the facility designs, stock and related aspects go with this formula, but, it is the customer shopping experience that is the key to winning their attitudes.


Answers.com (2006) ASDA. Retrieved on 25 November 2006 from http://www.answers.com/topic/asda

BBC Online Network (1999) Business: The Company File, A tale of two supermarkets. 12 April 1999. Retrieved on 26 November 2006 from http://news.bbc.co.uk/1/hi/business/the_company_file/317325.stm

BBC News (2001) UK poised for supermarket wars. 28 August, 2001. Retrieved on 25 November 2006 from http://news.bbc.co.uk/1/hi/business/1512847.stm

Just Food (2002) UK: Food retailers lead the way in product, store innovation. 22 July 2002. Retrieved on 26 November 2006 from http://www.just-food.com/article.aspx?art=50664&type=1

Food Business review online (2005) UK supermarkets: diversify or die. 5 April 2005. Retrieved on 26 November 2006 from http://www.food-business-review.com/article_feature_print.asp?guid=F7002651-4884-4DDA-BE2C-CAE9A7C11D3C

IGD (2004a) Employment in the Food & Grocery Industry. Retrieved on 25 November 2006 from http://www.igd.com/CIR.asp?menuid=146&cirid=1433

IGD (2006b) UK Grocery Retailing. Retrieved on 25 November 2006 from http://www.igd.com/cir.asp?menuid=51&cirid=114

Sainsbury’s (1994) Annual Report. Retrieved on 26 November 2006 from http://www.jsainsbury.co.uk/files/reports/ar1994.pdf

Sainsbury’s (1995) Annual Report. Retrieved on 26 November 2006 from http://www.jsainsbury.co.uk/files/reports/ar1995.pdf

Sainsbury’s (2005)Annual Report. Retrieved on 25 November 2006 from http://www.j-sainsbury.co.uk/ar05/files/report05.pdf

TNS (2000) Sainsbury’s Case History. Retrieved on 267 November 2006 from http://superpanel.tns-global.com/superpanel/Library/retailer_casehist_sainsbury.asp

Wikipedia (2006) TNS Superpanel. Retrieved on 25 November 2006 from http://en.wikipedia.org/wiki/TNS_Superpanel


Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: