Business Strategy Analysis
The retail industry comprises of various businesses where organisations engage in the selling of products. Over the years, this sector has developed with the growing demand and supply of goods and services. Several factors affect the retail industry influencing organisations to develop strategies to ensure growth and profitability. The business environment influences the managerial decisions that shall impact the organization. Business strategies enhance the company’s operations ensuring sustainability into the future. The industry contains supermarkets, shops, grocery stores, and butcheries. The business environment affects these businesses as any changes influence the management to execute strategies that shall promote the organization. However, the organizations may sometimes make mistakes in implementing certain tactics that shall result in loss or closure. Business analysis is crucial in organizing the company in the right direction and ensure sustainable growth and profitability.
Sainsbury’s is one of the largest retail chains in the United Kingdom. The owners, John James, and Mary Ann Sainsbury established the company in 1869 (Sainsbury’s plc, 2019). Over the years, the dairy shop located at Drury Lane grew and led to the establishment of branches in Kentish, Islington and Stepney town. The business was booming as the couple strived to build their brand. The shops sold dairy products, bacon, and poultry (Sainsbury’s, 2019). Sainsbury’s hired skilled workers that were responsible for preparing the products and handling the business. James and Mary were committed to ensuring the business grows. In 1925, Sainsbury’s had established branches across the UK in Bournemouth, Norwich, Cambridge and Oxford cities (Sainsbury’s, 2019). The management model favored the business to grow beyond London. Sainsbury’s hired staff to manage and run the operations in the shops as the couple undertook the overall managerial role in supervising and implementing strategies to boost their business.
Sainsbury was growing exponentially as people visited and purchased the items from the shops. The demand for products enabled the company to grow and establish its roots in the locations. In the oncoming years, the company grew to a supermarket where everyone would purchase all products under one roof (Sainsbury’s, 2019). The concept of self-service influenced Sainsbury to open a large store that had freezers that could store the meat and vegetables for a long period. Currently, Sainsbury’s supermarkets limited is a large retail company operating a chain of supermarkets across the UK. The supermarket deals in various products such as groceries, furniture, electronics, and home accessories (Williams, 2019). The company also runs an online store where they sell groceries and merchandise. Sainsbury’s has a large number of employees from the supervisors to intermediate staff that ensure they conduct their responsibilities diligently.
The business has remained dedicated to growing from a shop to a chain of supermarkets spread across the UK. Over the years, the organization has faced several issues that have threatened its sustainability but managed to cross the hurdles and emerged stronger. The organization’s vision has promoted the business operations ensuring that Sainsbury’s meet their goals. The vision concurs ‘our value is to be the most trusted retailer, where people love to work and shop. We’ll do this by putting our customers at the heart of everything we do and investing in our stores, our colleagues and our channels to offer the best possible shopping experience’ (Our vision, 2019, p. 1). Sainsbury’s desires to provide equal treatment to all people from the staff, suppliers, customers, and community. The customer-driven organization considers the significance of the stakeholders in promoting business operations.
Sainsbury’s business strategy accommodates the vision and mission of ensuring that the organization ‘regains its greatness’. The strategy is aligned with the company’s desire to be a trusted retailer that considers the value and importance of the stakeholders in its role in promoting business operations. Since Sainsbury’s inception, the organization has worked towards aiding the customers to attain proper living standards at considerable prices (Our values, 2019). The retail chain avails products at its facilities at affordable prices. The organization values its position as among the best retailers across the UK and has prioritized certain business schemes that shall support the vision (Our vision, 2019). The chain ensures convenience and flexibility in selling their products to a large group via various channels. This eases the way of doing business as consumers can comfortably purchase products via any channels at any location. The company also ensures that it prepare quality nutritious food. The vision catapults the retailer to ensure a safe and honest space where every stakeholder is satisfied with the organization’s services.
The business has a chain of supermarkets across the UK that sell various products from food to merchandise. The organization has existed for over a century adapting to newer technologies and the ever-changing business environment. The business has strived to ensure the availability of products to customers at fair prices establishing a rapport of fair business practices. Since 1869, Sainsbury’s vision has shaped the customer-driven strategy (Our Business Strategy, 2019). The organization’s business strategy focuses on the business’s impact on customers; always available to the customers selling their products at affordable prices. The business strategy is made of five pillars; our values make us different, great products and services at fair prices, colleagues making the difference, there for our customers and knowing the customers better.
The five pillars guide business operations. The organization’s values make them different in the aspect of ensuring trust that solidifies their relations with the stakeholders. The values enable the business to have low operating costs and avoid risks that may hurt the business (Our Business Strategy, 2019). By establishing trust, the business mitigates risks as the stakeholders acknowledge the significance of the organization is strictly following its strategies to meet the set goals. The chief executive officer, Mike Coupe posits ‘our values are integral to how we do business and they enable us to help our customers to live well, and drive lasting, positive change in communities across the UK and overseas (Our vision, 2019, p. 1). The organization also strives to sell products and services at fair prices for all customers. Sainsbury’s is dedicated to supporting economic stability by setting competitive prices for their products that the customers can afford.
The third pillar revolves around creating a positive environment for colleagues in the organization. The organization has employed people from all races and encourages intercultural relations where the colleagues understand their fellow workers and do their tasks collectively (Financial Overview, 2019). Also, the CEO has devised the inclusive objective where the organization hires the women and people from minority groups in managerial positions. Sainsbury’s also works towards complimenting the customers’ needs by ensuring they produce affordable quality food that is nutritious and shall promote their wellbeing (Financial Overview, 2019). By partnering with wellness researchers, the company surveys the population to devise the best approach to help boost their wellbeing in producing nutritious food. The company has acknowledged the life struggles of getting a balanced diet in the modern era and has taken the opportunity to cut down food ingredients to promote healthy living. Sainsbury’s has undertaken this initiative by reducing the sugar, salt and fat levels when preparing food (Financial Overview, 2019). This initiative has helped its customers take care of their health by entrusting the company to care for their wellbeing.
It is no doubt that Sainsbury’s has conducted business from over a century ago with the owners building the company from a shop to a chain of supermarkets. The large retailer has a portfolio of products ranging from food, clothing to merchandise. The organization strives to improve the quality of their food and services. It has undertaken expansive projects to promote sales and trust in society by establishing a good rapport with its suppliers as well as fulfilling the customers’ needs. Sainsbury’s also ensures that they sell their products and services at affordable prices for the benefit of the customers. The pricing strategy has promoted the company to be competitive in the retail industry. The marketing strategy has seen the company soar in the industry acquiring a large market share with its vast product portfolio. The SWOT analysis will indicate the strengths and weaknesses of the company. Also, the analysis shall demonstrate the various opportunities that the organization can explore as well as the threats it is facing.
The business operates several supermarkets spread across the UK. Also, the organization has an online grocery store and runs merchandise operations. These benefits the company by offering a wide variety of products to the population. Sainsbury’s also offers a wide variety of clothing that is sold under the acquired brands such as Argos and Habitat (Financial Overview, 2019). By offering various products under its name, the retailer has managed to grasp a large percentage of the market share as it envisions creating a trusted environment and prioritizing the customers’ needs. The organization also has achieved profitability continuously. By owning a bank, the organization has managed to facilitate its services and reduce debt. The financial statements indicate that the company has paid dividends amounting to £1.4 billion in the last five years (Financial Overview, 2019). Sainsbury’s is profitable as its share prices increase attracting other investors to join. The organization has also managed to boost its food production attracting customers to purchase their products. These factors have propelled the business to sustain its operations in all the branches.
Despite undertaking initiatives that promote the business, Sainsbury’s also has weaknesses. The organization is operating in a single market (Annual Report and Financial Statements , 2019). The European Union has allowed the businesses to set up in the member nations to transact in the bloc without trade barriers. The union has developed common policies that affect all organizations. This means that any retailer from the EU member nations can set up business in the UK and compete fairly with Sainsbury’s since there are no barriers regulating the organizations from other nations. The other weakness in the low margin food business. Sainsbury’s has invested in producing high-quality food to promote the customers’ wellbeing (Financial Overview, 2019). Unfortunately, the low prices affect profitability since the company may fail to breakeven. Although the company’s food production is a good approach to attracting customers, the pricing strategy puts the business at risk of failing to achieve any profitability or breakeven.
The market offers various opportunities for large retailers to utilize for their growth and profitability. Sainsbury’s has the opportunity to expand its operations globally via the online platform. The online platform gives the organization the opportunity to expand to the foreign market (Our business strategy, 2019). The online store can collaborate with companies in the foreign markets by providing the online platform and associating with the local companies to boost customers’ trust in the brand. Sainsbury’s may utilize the digital space to front its’ online grocery store in other markets and encourage potential customers to purchase at their convenience. The other opportunity revolves around the use of technology analytics to gather information regarding consumer behavior (Annual Report and Financial Statements, 2019). The retailer can hire people to analyze the market and gain customer insights via technology. These insights shall help the company improve its operations and products.
Sainsbury’s faces threats in sustaining its business in the UK. The most imminent threat is the impact of Brexit on prices. Brexit is threatening the business environment as the organizations attempt to make fast decisions regarding the possible impacts and the best recovery options. The Brexit vote in 2017 had a substantial effect on the cost pressure as the pound value dropped below the US dollar (Kollewe, 2017). The Brexit vote decline in 2019 also affected the business environment as the commodity prices increased. The increasing prices affected low sales as customers had a low purchasing power. The other threat is the increased competition in the retail sector. Sainsbury’s is facing stiff competition from other retailers such as Tesco and ASDA (Financial overview, 2019). These retailers have taken on huge investment projects where they have partnered with various manufacturers to supply a wide variety of products and services. Sainsbury’s has a huge task to ensure they continuously improve their operations and build their trust with both existing and potential consumers.
The PESTLE analysis helps to synchronize the macro-environment affecting the organization. The analysis looks at factors such as Political, Economic, Social, Technological, Environmental and Legal. These factors impact businesses and influence their strategies. Organizations utilize this analysis to gain an understanding of the aspects that shall affect their business and then develop the most appropriate approach to promote the company. The macro-environment affects Sainsbury’s business. The organization must analyze the factors to acknowledge any changes that shall impact its core objectives and devise a plan to boost its operations.
Politics affect the organization’s sustainability and profitability. The retailer operates in various countries exposing its business in different political environments. The retail industry is dynamic as the organizations must be flexible to change according to the political systems or close shop. Brexit threatens the sustainability of Sainsbury’s in the UK. The management has an uphill task to review the future impacts and structure their operations to remain profitable. The debt rates in the UK are high. The government and the people are struggling to pay the debts lowering their purchasing power. This pressure impacts the business as the consumer attitudes vary forcing the organizations to take risks to run its business. The host country’s relations with Qatar shall have a significant impact on Sainsbury’s. Qatar is facing a political crisis as the UAE and Saudi Arabia have imposed a blockade restricting any transactions with the nation (Arab Center org, 2019). Unfortunately, the UK is allied to all nations and any move against Qatar shall negatively impact Sainsbury’s due to the large stake held by the Qatar Investment Authority. Sainsbury’s is in a tough position awaiting the government’s response to the allies.
The UK is facing tough economic challenges following the Brexit move. UK’s pound sterling has been dropping after the struggle for Brexit. The currency decline shall negatively affect the nation’s value. The earnings are set to drop following the currency decline (Kollewe, 2017). Unfortunately, Sainsbury’s shall have to reduce the workers’ wages and allowances due to the decline. The currency decline also lowers the purchasing power as consumers shall opt for cheaper products that they need for daily living. Sainsbury’s shall have a tough time reviewing their wage expenditures to ensure that the business remains profitable and all stakeholders considered. They must communicate with stakeholders regarding the price correction, inventory management, and shareholding.
Sainsbury’s has a sustainable business strategy that shall promote the business towards attracting customers. The vision of ensuring a trusting environment promotes the business (Our vision, 2019). Also, the demand for organic food is advantageous to the business as their food production is structured towards promoting wellbeing.
Sainsbury’s has the opportunity to use technology to understand consumer insights. By using data-driven analytics, the organization shall gain sufficient information regarding consumer tastes and preferences (Financial overview, 2019).
The legal environment in the UK is hectic. The retail industry is facing a strict environment that is consumer protection. The regulator takes a long period to approve new practices (Williams, 2019). This delay hurts the businesses since they must wait for the approval to make decisions that shall impact the company.
Sainsbury’s is undertaking a strategy to protect the environment. The company is committed to cutting down carbon emissions. Sainsbury’s has developed a colleague engagement program to train and motivate employees to save energy (Financial overview, 2019). The company also sources electricity from renewable sources to reduce emissions. Environmental protection is crucial in protecting nature.
Sainsbury’s has proved to be profitable for the last five years. The large retailer has managed to establish stores across the UK and hired several employees that are motivated to sell the products and services. The organization has boasted of quality food products that have attracted many customers to their stores. The company believes in creating a trusting relationship with stakeholders. Despite these achievements, the company is struggling. The political and economic environment is negatively affecting sales forcing the organization to rethink its operations and take drastic measures. Brexit is the largest threat to its sustainability. The company’s low pricing strategy and heavy investment in food production are risky (Kollewe, 2017). By undertaking this investment, the organization only thinks of attracting the customers and forgets about the loss venture. The organization must rethink their food pricing strategy to avoid future issues that shall hurt its operations.
Sainsbury’s should utilize other growth strategies to revamp its business in the competitive sector. The market development strategy shall promote business growth. Market development entails searching for new markets to sell their existing products and services (Suttle, 2019). Sainsbury’s has branches in several towns in the UK. It is time that the giant store spreads its business to a foreign market. They are already well established in the UK and it is the right moment to try new markets outside the host country. Market expansion is not an easy task as there are already existing products in the region. The presence of other retailers should not scare Sainsbury’s from opening up a facility in the foreign market. The giant retailer may use this opportunity to sell their products and services at a lower price than the current price in that region. This directive is used to woe potential customers to purchase from the store and increase market share.
Sainsbury’s can also implement the diversification strategy. The organisation must rethink its products and services. Diversification entails selling new products in a new market (Suttle, 2019). This strategy is risky since it requires the organisation to conduct a market analysis to understand consumer needs and behaviour. Moreover, the organisation must comprehend the consumer tastes and preferences and seasonal items. The company can either diversify their products or services depending on the market. Diversification separates the dependence on one product as in the scenario that one fails; the other continues to support the business (Suttle, 2019). The current political and economic environment is tough for retailers. It will be appropriate for the retailer to diversify its products in the scenario that the business suffers in extreme circumstances; the organisation can rely on the other products for sustainability. Nevertheless, the strategy may fail and cause the failure of the organisation.
Sainsbury can also use a competitive strategy to enhance growth. The current market is competitive as other retailers have intensified their operations to increase their market share. Retailers such as Tesco and ASDA have overtaken Sainsbury’s through aggressive marketing and establishing stores in several urban centres. Sainsbury’s should utilise the competitive strategy to increase their percentage of the market share. They can invest in promotions. This activity entails market segmentation whereby the company understands the population needs around different regions (Suttle, 2019). This information shall enable the company to acknowledge their needs and avail the appropriate products and services according to demand. Also, Sainsbury’s can promote multiple brands whereby they sell similar products from different brands. The retailer shall enhance competition in the region and demand in the long last. Understanding the consumers’ tastes and preferences catapult the organization to know the most sought after brands and avail them at their stores.
Sainsbury’s can also enhance green loyalty among consumers. The organization can take advantage of the current trend whereby people desire environment-friendly products. Green consumers tend to avoid any products that endanger the environment (Dabija, 2018). The modern generation is aware of the environmental issues affecting the world. They have taken the initiative to create awareness about environment protection and have advocated for environment-friendly policies (Dabija, 2018). Sainsbury’s can take advantage of this initiative by availing environmental-friendly products. They can also partner with society in environment protection activities to advertise their products and services. This initiative would boost consumer loyalty as they shall believe and trust in the organisation’s efforts to take care of the environment. Sainsbury’s initiative to prepare organic food is also an excellent strategy to woe the green consumers and ensure loyalty. The organisation’s online presence shall benefit the organisation as consumers would utilise the platform to purchase products as well as can recommend other people via the organisation’s website.
Sainsbury’s business strategy has promoted the organisation’s operations for a long time. The management and staff have ensured that the organisation remains competitive in the sector. The organisation has survived many seasons in the vision of guaranteeing trust with the stakeholders. However, the political and economic crisis poses a threat to the sustainability of the organisation. The Brexit impact has already begun hurting the retail sector with the increasing inflation rates and price increase. Nevertheless, Sainsbury’s can tap the various opportunities to use technology to improve their sales. The large retailer may take pride in establishing stores around the country and feel it as an accomplishment. It may have a large market share but must rethink its business strategy to ensure continuity in the future. Sainsbury’s should look into market expansion and product diversification if it desires to grow.
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