Introduction
Sainsbury’s began in 1869 as a small diary shop by John James and his wife Mary Ann Sainsbury. Today, after Tesco and ASDA, Sainsbury’s is the third-largest name amongst the supermarket chains in the United Kingdom with its headquarter at Holborn (Wright, McCrea, and Sainsbury’s, 2007). This S.W.O.T. analysis aims to identify the performance dimensions of Sainsbury’s stores: internal factors that include its strengths and weaknesses, and external factors that include its opportunities and threats.
Strengths
Sainsbury is a big name in the United Kingdom. Being the third-largest supermarket chain in the country, it employs approximately 151,000 people and serves over 16 million customers every week (Madslien, 2004). Besides its 788 outlets out of which about 300 are convenience stores and the rest are supermarkets, it also sells its products online.
The grocery market is one in which availability and nearness of a store is the main determining factor of its popularity. Sainsbury’s has stores all over the United Kingdom. Some of its stores are small for those who have less time and only wish to buy a few items, while some of them are large for those who wish to purchase their monthly groceries from the store.
Sainsbury’s has diversified over the years: it is not just involved in grocery retailing, but also banking and property dealings. Sainsbury’s is continuously looking into enhancing its spread by opening up more stores and offering services online. For a large public limited company like Sainsbury’s, it is easy to get financing to meet the required expansion (Madslien, 2004).
The most significant strength of Sainsbury’s is that it associates itself with high-quality, fresh, and tasty food items at fair rates. This is increasingly important today when there is an increasing concern about cases of obesity. Furthermore, it is developing the sale of its non-food items (Wright, McCrea, and Sainsbury’s, 2007). Sainsbury’s staff is motivated and friendly and this helps facilitate sales. Sainsbury’s customers have a lot of faith in the company which has helped it launch its own-brand products.
After a slow down of performance, Sainsbury’s addressed its distribution and pricing issues and its share of the total grocery market increased to 15.9% in 2005 (Mesure, 2005). Moreover, Sainsbury’s strength lies in the fact that it considers the interests of all its stakeholders. Even though Sainsbury’s comes after Tesco and ASDA in terms of market share, it is still a very strong name in terms of brand recall. This is because the customers of Sainsbury’s experience value for money by shopping at its outlets (Heller, 2005).
Sainsbury’s is very customer-centered. It constantly keeps in touch with customer needs to make them loyal to Sainsbury’s. This is one of its success factors (Wright, McCrea, and Sainsbury’s, 2007). People shop at Sainsbury’s because of its store accessibility, pricing, variety, quality standards, and association with healthy food.
Weaknesses
The most obvious weakness of Sainsbury’s is that it is still not the largest supermarket chain in the United Kingdom. It faces tough competition from Tesco and ASDA and the increasing popularity of fast-moving consumer goods is intensifying competition. Many people do not like going to Sainsbury’s because it means waiting in long queues at cash counters.
Another weakness of Sainsbury’s is that consumers perceive its prices to be above those of its rivals. This is important because the price is the major competing factor for retail stores. Recently Sainsbury’s managers have reduced prices but this has been at the expense of lower dividends, hurting the interests of the shareholders.
In 2004, Sainsbury’s performance was below the mark and its profits fell. This was a serious issue for the managers who had to work towards revamping the company (Madslien, 2004). Although Sainsbury’s has made a remarkable recovery, it has been a difficult journey and the effects of the poor performance still linger on. Furthermore, Sainsbury’s operations are limited only to the United Kingdom.
Opportunities
As people are becoming more health-conscious, Sainsbury’s should use this opportunity to portray itself as promoting a healthy lifestyle. Sainsbury’s managers could work on the décor of the stores by providing nutrition facts to customers. For instance, above the green tea shelf, they could place the advantages of drinking green tea every day such as a healthier heart and reduced fat accumulation on the body.
Another opportunity that Sainsbury’s is recently capitalizing on is carrying out promotional activities in schools like donating sports equipment (Finch, 2005). Fairs or competitions could be organized for school children (and for adults) in which Sainsbury’s products and their quality could be highlighted.
One issue that people have with supermarkets is that they have to wait in long queues at cash counters. Sainsbury’s could provide them with entertainment such as setting up television sets near the counter that can be viewed by anyone standing in a line. This would not only enhance the promotion but would also reduce the frustration experienced by many customers who despise waiting.
One more opportunity that Sainsbury’s has is home delivery of products as well as expanding its distribution outside the United Kingdom. However, this would be a long-term decision and would involve a lot of costs and market research. Online sales could be further exploited as well. Sainsbury’s could also start up small cafes for shoppers to enable them to relax while shopping.
Threats
The one major threat that Sainsbury’s faces are the competition between Tesco and ASDA. As other firms reduce their prices, Sainsbury’s faces a greater threat than will lose its customers. The staff morale and performance at Sainsbury’s is said to be increasing but there is always the threat of them leaving the company to join a competitor firm.
For a firm as large as Sainsbury’s, it can be a problem to provide good, personalized services to customers. As the business grows bigger, customers may switch to smaller stores that give them a better service. Yet another threat is that Sainsbury’s sales depend on its suppliers and workers. If they go on strike, Sainsbury’s will suffer a major loss. Workers demanding higher pay have previously gone on a strike.
Sainsbury’s is a public limited company. Hence any rumors can lead to a drastic fall in its stock price. Also, Sainsbury’s can face legal action for breaking government laws and requirements.
Conclusion
Sainsbury’s is a big brand name in the grocery industry. However, in the rapidly changing environment of today, firms must continuously respond to market trends if they want to survive. It is important to always be ahead of one’s competitors, in terms of price, product, promotion, sales staff, distribution, product quality, and so on. Today, shopping is not just about purchasing goods: It is an experience. People often prefer to go to supermarkets that have relaxing music, perhaps a small cafe, friendly staff, and a good ambiance. Moreover, due to the hectic routines people have today, they would rather go to one store that offers everything, rather than to several different stores to purchase all that is on their list.
Hence although Sainsbury’s is a well-known name in the United Kingdom, there is always the necessity of continuous improvement to thrive and gain a greater share of the market.
Bibliography
Books
Wright, S., McCrea, D., and Sainsbury. (2007) The Handbook of Organic and Fair Trade Food Marketing. Publisher: Blackwell Publishing
Websites
Heller, R. (2005) Marketing Strategy: Big brands need to make up lost ground. Thinking Managers [internet] Web.
Madslien, J. (2004) The challenges facing Sainsbury’s new chief. BBC [internet] Web.
Mesure, S. (2005) Sainsbury’s growth overtakes Asda. Web.