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Module: CB311 Lewis Appleton
J SAINSBURY PLC
A SWOT analysis on the company with
CB311 – BUSINESS SKILLS
Module: CB311 1 Lewis Appleton
Sainsbury's is a UK based company founded in 1869, they currently operate over 1000 stores,
which are almost 50% of both supermarkets and convenience stores. The organisations focus as a
majority is retail business, this includes food and non-food products as well as a variety of services.
Sainsbury's has made an array of investments which include management of properties, energy and
banking. The organisation has been successful at creating their own branded products alongside
selling those products belonging to specific brands. The organisation has generated £25632 million
in the 2012/13 financial year, £614 million of this is profit after tax, and this being a 2.7% increase
than the previous year. Sainsbury currently have a long term “deliberately stretching” goal named
the “20x20 sustainability plan”, this contains 20 goals that Sainsbury plan to achieve by 2020.
This report will make use of the available secondary data as part of a short report on J Sainsbury plc
in order to complete a SWOT analysis report. SWOT analysis is a tool that will be used to relate the
position of Sainsbury to the environment they operate within. The SWOT analysis will include an
evaluation of strengths, weaknesses, opportunities and threats. The annual report for Sainsbury
published on 5th June 2013. To correctly make an evaluation and analyse Sainsbury's position, non-
biased sources have been used including news articles from respected publishers.
Since established in 1869, Sainsbury have focused primarily on retail business, The Annual report
carried out in 2013 shows that underlying profit has increased 6.2% from the previous year to an
amount of £756 million. This figure has been increasing over the past 5 years, however, the rate of
this has been reducing from an increase of 19.6% to the 6.2%. Despite the diminishing increases,
the increases are still of significant value with the most recent being a difference of £44 million.
While the increases here are reducing, the market share is consistently increasing with a recent
increase changing the position of Sainsbury being the third largest supermarket to the second,
overtaking ASDA's 16.4% with a market share of 16.6%. (The Independent, 2013)
Sainsbury is well known for their strong brand name, they have a good reputation in the market,
Sainsbury mainly operate in the UK and are therefore able to push their focus on this one area
whereas competitors such as Tesco have stores in other countries, whilst this does limit the market
to which Sainsbury can appeal to it allows them to focus on this market. This has proven to be
successful over the past few years with recent reports showing a profit increase of 9% (BBC, 2013),
this proves that the way they are operating is working especially the fact that their own branded
products are selling well, this is a benefit as there are less costs from this and therefore more profit
can be made compared to selling branded products.
Sainsbury have a large number of employees, while it is true that this means there are more costs it
also works in the respect that more work can be done simultaneously and this large number of
employees allows the organisation to work at a faster rate. Sainsbury has been able to focus on
operating within the UK and has managed to obtain a strong presence, this being shown clearly by
their 16.6% market share. Their own brand has even developed to the point that it is outperforming
many branded equivalents, their “basics” range being the second largest value brand in the market,
the Annual report (Sainsbury, 2013) highlights that they were awarded the “Own Label Brand of the
Year” in the Grocer Gold Awards.
Module: CB311 2 Lewis Appleton
Sainsbury have also been successful at persuading customers to use Sainsbury rather than
competitors, they have done this with a “Brand Match” scheme where if products were cheaper at a
competitors store, the customer will a receive a discount coupon for the amount, this makes
effective use of new technology as these prices are able to be compared instantly.
Sainsbury have a highly successful partnership running with Nectar in the form of the Nectar Card
scheme, this addresses loyalty and allows shoppers to accumulate credit, while at the same time
data can be used by Sainsbury for research and development, Sainsbury’s Nectar Card scheme has
12 million users, Tesco’s Clubcard only has 15 million users despite having close to double the
market share of Sainsbury, this shows Sainsbury are effectively retaining their customers, while the
actual savings for the customers are not high, the fact that they may be persuaded to shop again is a
bonus for Sainsbury.
Sainsbury previously announced their 20x20 sustainability plan in which they aim to meet 20 goals
by the year 2020, this was recently awarded with many awards such as the Sustainable Retailer of
the Year in 2012 and being commended for 2013.
While Sainsbury are a part of the main competitors operating in the retail sector, Tesco appears to
be dominating the market still at a market share of 30%, close to double of Sainsbury who are in the
second position. With such a large difference it seems impractical for Sainsbury to catch up anytime
soon, this may be due to a number of reasons such as a lack of advertising or Tesco moving into
other methods of distribution.
A large weakness that Sainsbury faces is that it is limiting it’s potential by operating solely in the
UK, their largest competitor is operating Globally and this has proved to be highly successful yet
Sainsbury has made no attempt as such to enter these new markets, this may be because they do not
fully understand the current trends and operating environments compared to where it currently
operates. This can be a disappointment to potential investors as there is a lack of expansion which in
turn has a potential for high profits.
While the loyalty scheme “Nectar Card” has proven to be successful at gaining new members and
allowing them to accumulate points it hasn’t proven to show many other advantages, a recent poll
by WorldPay (WorldPay, 2013) has shown that use of loyalty cards is diminishing due to customers
feeling they don’t add value, those who do use them have also found Tesco’s Clubcard in favour,
the possible reasons for this include that it can be used in places other than Tesco itself such as the
Café Rouge at a reduced price, another who took the poll also mentioned “free cinema tickets and
free vouchers”, most likely these are money off vouchers for Tesco but regardless they are
“awarding” the loyalty more than just 1% off store purchases.
Sainsbury’s competitors have a large impact on whether customers go to them or Sainsbury, with
the recent introduction of the “Brand Match” scheme, customers have been able to save and not
have to worry about who will have cheaper prices because they can go to Sainsbury and get the
cheapest price, however with the competitors introducing their own versions of these price match
promises it is reducing the benefit to Sainsbury. The fact that the Brand Match is only available to
in-store shoppers at large stores limits who can take advantage of this, with more people now using
online shopping if somewhere else offers a brand match scheme and offers it online then they may
choose them instead, the same applies to Sainsbury’s convenience stores.
Module: CB311 3 Lewis Appleton
Sainsbury has a large consumer base and are therefore able to take advantage of this with Christmas
deals and campaigns, Sainsbury recently launched an hour long film (The Grocer, 2013) a few
weeks ago which managed to gain almost a million views, this shows that the video has been
successful, even down to celebrities sharing their interest on twitter, sharing is a highly important
part of videos, the fact that twitter accounts with millions of followers shared the video is a
significant part of the videos views, Cheryl Cole’s tweet alone got 1600 retweets, that is 1600
people sharing it once again which in turn leads to more views, this clearly shows the possible
opportunities for Sainsbury to do more similar things in the future.
Sainsbury have announced that they will stop selling physical media, while this does pose a
weakness by ignoring the demand it does create opportunities, the first being that by selling music
tracks online rather than by in physical form is that there are less costs and generally if the music
has been purchased to distribute then Sainsbury can sell all they want without need for these extra
cost, by selling other products in digital form customers are able to get what they purchase right
away and with the natural desire for things right away this could prove to be advantageous.
Sainsbury recently received an award for “Brand of the Year” (Marketing Magazine, 2013), this has
a potential for the business not only to let customers know of their success but also to attract new
customers through their success. The award may persuade current customers to buy Sainsbury’s
own branded items rather than branded goods as the award that Sainsbury’s received is a visual
example that they are operating successfully. In the same way this has potential to attract those who
shop at competitors to shop at Sainsbury.
Sainsbury’s competitors have recently had issues, the most well-known being the horse meat
scandal at Tesco and a few smaller competitors, while this had an impact on Tesco’s sales (Supply
Management, 2013) and the trust that consumers have in Tesco, sales elsewhere including in
Sainsbury will have risen, for a scandal as large as this one it may take a while for some consumers
to regain trust in Tesco and therefore there is an opportunity for Sainsbury to gain new customers
from this. This could lead to Tesco’s market share falling and if Sainsbury were to be innovative
they could make ground by raising their own market share.
Sainsbury face the same problem that most organisations do, that is, competitors, the fact that Tesco
is nearly double Sainsbury in terms of market share is a threat as Tesco most likely significantly
reduce the profitability for Sainsbury, the fact that there are a few other large competitors such as
ASDA and Morrison’s, although smaller, will also impact on the sales of Sainsbury, therefore
Sainsbury should try to be innovative and give consumers reason to pick them rather than
With many organisations moving into online strategies there are many potential threats as a result of
using technology, one of the largest of these is cyber-attacks, this is essentially when people hack
into systems, recently Adobe were compromised and many emails and encrypted passwords on their
database were leaked, clearly if someone was able to hack into Sainsbury’s website and steal
customers details then this would need to be addressed which provides a requirement for security
which can be costly to obtain, as well as cyber-attacks running a website in general can be costly as
Sainsbury will have to pay for bandwidth and staff to manage and run their online operations.
In general the rising cost of living may force people to reduce how much they spend, as a result of
this if Sainsbury are clearly not offering the cheapest products they may find that customers will be
Module: CB311 4 Lewis Appleton
forced to shop elsewhere due to these rising costs. The cost of living is unlikely to fall anytime soon
so this is something that should be addressed. Recently a customer bought a cereal bar full of hairs
(Mirror, 2013), although this did not lead to masses of bad publicity it easily could have done and
the public apology that Sainsbury gave should prevent bad publicity from occurring although there
is still the threat that it can happen.
Although Sainsbury never managed to fully exploit its opportunities when establishing before many
competitors it has been recently successful at increasing its profit as a percentage more and more
each year, their success has been seen with their recent increase in market share placing them above
their competitor ASDA and therefore taking the spot as the second largest chain of supermarkets in
the UK. Sainsbury have been effective at improving their reputation in the UK going as far as
winning awards for best brand. The weaknesses that Sainsbury suffers from are not a loss of profits
but rather a loss of potential for more profits, the fact that they operate solely in the UK has been
successful although it does limit their potential. Opportunities have appeared as a result of a recent
Christmas film for Sainsbury to make use of social media which essentially can be free advertising,
the increase in online operations allows Sainsbury to reduce operating costs. Other than
competitors, Sainsbury do not face many threats, the main one being the risk of operating online, as
long as there is security there should be no problems.
Based on the findings and analysis above, there are a few recommendations that could have
potential for good to the operations of Sainsbury’s. The first of my recommendations is that
Sainsbury make more effective use of social media, if they were to have interesting content as such
to share such as the recent Christmas film then it would give reason for consumers to show interest,
this in turn could attract more consumers and essentially would be a form of free advertising, a
possible way to do this would be to offer unique offers that are only available through these social
media platforms whether it be competitions or giveaways to win free goodies or simply a money
saving offer to be used in store, this would give reason for consumers to want to use the social
Sainsbury do have an effective “Brand Match” scheme that allows customers to save money if they
would have saved shopping elsewhere however it would be a more idealistic situation if the
customers didn’t have to go elsewhere to get a cheaper price, while its impractical for Sainsbury’s
to have the cheapest price they should aim to lower their prices on both their own branded products
and other branded products, if customers start to notice they could have saved at Sainsbury they will
be more inclined to do so.
Sainsbury’s Nectar Card scheme has been effective at promoting loyalty however findings from a
poll found that their competitor’s Tesco Clubcard was more favourable due to the variety of
benefits, Sainsbury’s could challenge this weakness by introducing more benefits to the Nectar Card
such as regular offers and the opportunity to enter free prize draws, this would be highly
appreciated by consumers and may also attract new members.
The last recommendation for Sainsbury is to consider expanding into other countries, whilst this
doesn’t have to mean opening a chain of stores in America it could be as simple as experimenting
with a store in another country and evaluating the progress, competitors such as the market leader
Tesco have been successful at operating in other countries and therefore it is possible that the same
will happen for Sainsbury.
Module: CB311 5 Lewis Appleton
BBC. (2013, November 13). Sainsbury's reports 9% rise in half-year profits. Retrieved from BBC
News Business: http://www.bbc.co.uk/news/business-24922971
Marketing Magazine. (2013, November 22). Sainsbury's wins Brand of the Year. Retrieved from
Marketing Magazine: http://www.marketingmagazine.co.uk/article/1222037/sainsburys-
Mirror. (2013, November 23). Sainsbury's offers 65p refund after customer bites into cereal bar full
of HAIR. Retrieved from Mirror News: http://www.mirror.co.uk/news/uk-news/sainsburys-
Sainsbury. (2013, June 5). Sainsbury Annual Report 2012/3. Retrieved from Sainsbury:
Supply Management. (2013, June 6). Tesco sales hurt by horse meat scandal. Retrieved from
Supply Management: http://www.supplymanagement.com/news/2013/tesco-sales-hurt-by-
The Grocer. (2013, December 13). Sainsbury's Christmas in a Day film racks up 842,000 views.
Retrieved from The Grocer:
The Independent. (2013, October 26). Sainsbury's overtakes Asda to become UK's second-biggest
supermarket. Retrieved from Independant:
WorldPay. (2013, August 21). Omni-Payments Report. Retrieved from WorldPay: