Current Trends in the Retail Industry: Analysis of Sainsbury's
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This report explores the current trends in the retail industry and analyzes how Sainsbury's, the second largest supermarket chain in the UK, utilizes these trends to its advantage. It includes an analysis of Sainsbury's using SWOT and PEST frameworks, along with recommendations for its future success.
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Table of Contents INTRODUCTION...........................................................................................................................3 TASK..............................................................................................................................................3 Current trends of Retail industry.................................................................................................3 Analysis of organisation using SWOT and PEST frameworks..................................................5 Recommendation.........................................................................................................................7 CONCLUSION................................................................................................................................8 REFERENCES................................................................................................................................9
INTRODUCTION The retail industry consists of selling finished goods to the ultimate consumer by individuals and organisations. There are various retailers all around the globe including grocery, department stores, medical stores, convenience stores, electrical stores and other speciality stores. Sainsbury's is the second largest supermarket chain in the United Kingdom. J Sainsbury plc is the holding company of Sainsbury's Supermarket Ltd. It holds a 16% share in the supermarket sector in the entire UK. The retail industry can be classified on the basis of products and distribution channels. In this report the author will cover the current market trends in the retail industry along with the analysis of Sainsbury's and how it uses these trends in its favour. The author will also use an external business environment analysis on Sainsbury's and give recommendations on the basis of the information enlisted by him(Dolenc and Kazanis, 2020). TASK Current trends of Retail industry The retail industry is going through enormous changes due to continuous changes in consumer behaviour and their increasingly high expectations. The retail business houses need to analyse the industry trends in order to evaluate their business and check how successful it is and what can be done to make it more successful in the future. Some of the key industry trends are: Investment in Omni-channel retail Strategies: Omni-channel is strategical approach which helps the retailers to provide consumers with seamless shopping experience, even if they are using a mobile phone or a desktop to shop, or they are buying through telephones and directly going to the store. According to a research an average consumer owns around 3.64 connected devices which he uses to consult before purchasing or buying a finished good(Iwasawa, 2021). Consumer can purchase a product by using one device and reviewing it on another device. Due to the existing of connected devices the consumer demands a seamless shopping experiences at multiple touchpoints. Most of the retailers now focus on formulating a strategic policy involving these connected devices, mainly mobile phones as it enables them to take advantage of one of the most connected devices and get its help to capture more market and make more sales(Top 5 Emerging Retail Industry Trends, 2021). Personalised Retail Experience:
Personalisation is a method which retailers use to provide customers with a more personalised shopping experience. In this the retailers give suggestions to the consumerswhich is based on the taste, preferences, locality, order history and previous searches of the customer. Retailers create personalised experience for users by interacting with them and establishing personal relations with them(Sun and et. al, 2020). This can be done by using chat boxes on various apps and website which increases consumer involvement and interest. Retailers can also used online and telecommunication based services and text messages. The rise of personalisation has led the use of more advanced techniques and technologies such as Artificial Intelligence (AI) which learns from consumer behaviour and preferences and provide them with the product that the desire. Growing Culture of Immediate Response: Increasingly advancing technologies is making consumers more and more impatient customers in the retail industry. As per a research, nowadays consumers expects a communication response in 10 minute as compared to older generations who expect a communication response in 10 days. As a result of change in the nature of the customer behaviour and their increasing need of immediate services the retailer has to work on their speed and diversification of services along with its expansion(DeFeo, Tran and Gerken, 2021).Some of these services include: offering same-day delivery services, presenting and updating inventory in real-time, setting-up delivery- lockers, restocking stock quickly and providing scheduled deliveries. The incorporation of these services can prove to be a challenging task as the retailers will need a strong supply chain to incorporate these. Sanitising products and services: Therecentsituationofpandemichasresultedinincreasedawarenessamongconsumers regarding the use of sanitisers and sanitisation services. The consumers are more concerned about their health and well-being as a result they are induced to use more sanitisation products and services. As a result of change in the nature of the customer behaviour and their increasing need of sanitisers and sanitising products the retailers have to work and produce more sanitising products like hand sanitisers, spray sanitisers, disinfectant spray etc. Retailers must also provide products which are made with taking proper safety measures and free from all the impurities (Putri, Usman and Cahyati, 2019).
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Analysis of organisation using SWOT and PEST frameworks SWOT ANALYSIS: SWOTanalysisisaframeworkdesignedtocompilethestrengths,weaknesses, opportunities and threats of an organisation or individual(Elisanti and et. al, 2020). SWOT analysis helps the management of an organisation to evaluate the internal and external factors affecting the business of the organisation. STRENGTHSWEAKNESSES Sainsbury's has effective management whichtakesefficientdecisions regardingtheexpansionandgrowth opportunities of the business. It makes the right expansion moves which helps the company to grow at a considerable rate. Sainsbury'shasawiderangeof products to offer consumers. There are differenttypesofcustomersand Sainsbury's is able to exploit that factor and cater to the economy in its own way. Like every other retail brand it is hard for Sainsbury's too to retain customers. It faces a lot of brand switching risks evenwhenitregularlyindulgein customerloyaltyprogramsand promotions. Due to the fast growing retail sector, growingcompetitionandonline retailers,Sainsbury'ssaleshave decreased significantly, as a result they have to cut the profit and sell it on a lowerpricetoretaincustomersand capture more market. This has resulted in low level of margins. OPPORTUNITIESTHREATS Sainsbury'scangreatlybenefitfrom selling and providing their products in theruralmarket.Brandeddaily productsareusedevenintherural areas.Thishasgivenarisetothe supermarket culture even in the villages and other remote areas. This will be a great opportunity for Sainsbury's as it One of the major threat that Sainsbury's has is the growing competition and the alreadyexistingcompetitionithas formthecompanieswhichalready existsinthemarket.Itsmajor competitorsareASDA,Walmart, Tesco,AldiandLidl.Policiesand decisions made by the competitors of
willincreaseitsmarketcaptureand provide with new customers. Sainsbury's directly affects the business of Sainsbury's. PEST ANALYSIS: PEST analysis is a framework designed to evaluate the macro or external factors of business environment of an organisation or individual. PEST analysis helps the management in strategic planning and management(Reis, 2019). By this the organisation can predict the future trends and factors which will affect the business, and prepare itself and make necessary changes in its policy and structure to overcome those barriers. PESTDESCRIPTION PoliticalOne of the major political factors which affected Sainsbury's was the Brexit movement. When the United Kingdom voted to leave the European Union it had severe consequences on the business of Sainsbury's along withothersupermarketchains.Brexitwillmakeitdifficultforthe supermarket chains to import and export products from different countries. EconomicalThere is a continuous increase in fuel prices all over the world. This has madethetransportofgoodsallaroundtheworldmoreexpensive. Sainsbury's and other supermarkets consider these costs, to cover this cost the supermarkets increase the price of the products or decrease the profit margin which affects the overall profitability of the business. There are a lot of supermarket chains in the United Kingdom including Sainsbury's, Tesco, Walmart, Asda etc. This implies that there is fierce competition in supermarket industry. This competition have an adverse effect on the business of Sainsbury's as it requires the company to minimise its profits and continuously focus on innovation. SocialConsumer these days are more health conscious and no longer rely on junk food and unhealthy items. This has resulted in increased demand of healthy food like shakes, salads and body-conscious snacks. This trend is really important in the retail industry as analysing the needs and wants of the
customers will help the business to be profitable in the long run. TechnologicalSainsbury'shasdiversifieditsbusinessandnowitprovidesonline shopping options to its customers. In this current pandemic situation people like to order food and groceries from the comfort of their home. The technology proved to be very supportive and useful in the pandemic. It also helped Sainsbury's to increase its volume and earn more profit. Recommendation In the above sections of the report the author has enlisted various retail industry trends and with their brief analysis, the author also used internal and external business environment analysis framework to analyse and evaluate Sainsbury's. The analysis framework used by the author are SWOT analysis and PEST analysis. They helped in assessment of internal factors; strengths and weaknesses, and external factors; opportunities, threats, political factors, economic factors, social factors and technological factors of the company(Geijsel and et. al, 2020). By analysing the above information a few recommendations can be made for the company which can help it to be more profitable: The company has technology in its favour. It has expanded globally, introducing online portal for shopping and making its products available to consumer remotely. It can introduce more personalised selling experience on the online platform by providing good consumer support and chat bot facilities on the application and desktop shopping portal of the company. It can also introduce Artificial Intelligence (AI) which will help the company to analyse consumer behaviour and provide customers with the products they need and want. Sainsbury's can also introduce order and pick-up facilities, which means a consumer can order online and pick the same from the store or supermarket without any hassle. Sainsbury's had business plans to merge with Asda which did not succeed because the respective authority feared that there might be a increase in the price of products provided by both of them to the consumers. They can propose the same plan with an amendment and promise to have the same profit margin in the products which will prevent both of the companies to increase their prices solely based on the factor of profit maximisation and
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increasing level of margin. Both of the companies will have enough collective resources which can be used to minimise the production cost and sell their products at a lower price which will further help in increasing the sale volume and capturing more market, ultimately earning more profit. Consumers nowadays thrive for innovation and newness in everything that thy buy. They pay for the satisfaction they derive from the products and services. It is truly important for the companies to satisfy the customers in order to retain them and get new ones and the key to satisfy consumers is providing them with what they want. Sainsbury's must continue innovating its products and services. It should introduce new and innovative products in order to attract more customers. It can further diversify its product range and introduce more products for different sections of the market. By doing this Sainsbury's will be able to satisfy its consumers and retain them along with creating loyalty among them. Sainsbury's will be able to attract more customers as well which will increase its market share. CONCLUSION The above report concludes that the retail industry trends are truly volatile and keeps on changing, retail businesses has to consider these changes in order to maintain stability and earn more profit. The report also stated the factors affecting the business of Sainsbury's. These factors can be classified into two types; internal and external business environment factors. The author also enlisted some recommendations that can help the business to be more profitable.
REFERENCES Books and Journals DeFeo, D. J., Tran, T. C. and Gerken, S., 2021. Mediating Students’ Fixation with Grades in an Inquiry-Based Undergraduate Biology Course.Science & Education.30(1). pp.81-102. Dolenc, N. R. and Kazanis, W. H., 2020. A Potential for Interest Driven Learning to Enhance the InquiryBasedLearningProcess.THENATIONALSCIENCEEDUCATION LEADERSHIP ASSOCIATION JOURNAL, p.121. Elisanti, E. and et. al, 2020, March. Analysis of Students Inquiry Skills in Senior High School ThoughLearningBasedontheHierarchyofInquiryModel.InInternational Conference on Progressive Education (ICOPE 2019)(pp. 409-414). Atlantis Press. Geijsel, F. and et. al, 2020. Embedding inquiry‐based practices in schools: The strategic role of school leaders.European Journal of Education.55(2). pp.233-247. Iwasawa, T., 2021. Generating Student Questions in an Inquiry-Based Classroom: A Case Study of Primary Years Programmes. InEducational Reform and International Baccalaureate in the Asia-Pacific(pp. 131-154). IGI Global. Putri, Y. A., Usman, E. A. and Cahyati, M. T., 2019. Meta-Analisis Pengaruh penggunaan Model InquiryBasedLearningterhadapKompetensiKeterampilanPesertaDidikdalam Pembelajaran Fisika.Jurnal Penelitian Pembelajaran Fisika.5(1). Reis, O., 2019. Inquiry-Based Learning in Theology. InInquiry-Based Learning–Undergraduate Research(pp. 341-349). Springer, Cham. Sun, D. and et. al, 2020. Design and Implementation of the Boundary Activity Based Learning (BABL) Principle in Science Inquiry: An Exploratory Study.Journal of Educational Technology & Society.23(4). Online: Top5EmergingRetailIndustryTrends,2021.[Online]AvailableThrough: <https://www.mulesoft.com/resources/api/top-retail-industry-trends/>