Sainsbury's Retail Performance Analysis: Trends, SWOT, and Strategies

This report provides a comprehensive analysis of Sainsbury's within the UK retail sector. It begins with an introduction to retail trends and an overview of the retail industry, followed by an in-depth analysis of Sainsbury's, including its history and current market position. The report then presents a detailed SWOT analysis of Sainsbury's, identifying its strengths, weaknesses, opportunities, and threats. Based on this analysis, the report offers strategic recommendations, such as focusing on penetration pricing, improving online sales, bulk purchasing of raw materials, and enhancing customer loyalty through various benefits. An action plan is also included, outlining steps Sainsbury's can take to implement these recommendations and improve its competitive position. The report concludes by summarizing the key findings and emphasizing the importance of the SWOT analysis tool in strategic decision-making within the retail sector.

Research Company
COOP

Table of Contents
INTRODUCTION...........................................................................................................................1
Retail trends.....................................................................................................................................1
Retail industry analysis................................................................................................................2
Analysis of Sainsbury’s...............................................................................................................4
SWOT analysis of Sainsbury’s....................................................................................................5
Recommendations............................................................................................................................6
Action Plan......................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Selling products to customer in small quantities for their consumption is known as retail
process (Chhibber, 2019). This study is based on retail sector and Sainsbury’s which is the 2nd
largest chain of supermarkets in the UK. This present study is about to discuss trends of retail
sector of the UK as ho changes in economic, social and environmental changes are affecting
companies. Which changes are in the favour of companies and are in against. Further, it will also
show that how Sainsbury’s analyse internal business environmental factors with the help of
SWOT analysis tool. This analysis allows it to make an action plan on the basis of weaknesses
and other factors and making an effective position in the market.
Retail trends
In the context of retail sector and its trends it can be said that it is changing at an
unprecedented speed as it has several opportunities as well as challenges. As compare to 2010,
2019 is being estimated and considered slowest rate of spending growth and its all because of
Brexit uncertainty. One of the main loss and problems which people faced with Brexit
uncertainty is job lost of around 85000 with around 9,169 shops closure. On the flip side, due to
advanced technology online selling is stated raised and continued to grow (Retail trends, 2020).
Payment flexibility
One of the current trends is changes in payment system due to advanced technology and
sues of technology by all people to the great extent. In this sector, payment changes are one of
the main changes which occur and those companies who have flexibility skill they can take
advantages of this current trends. It will be difficult for small organizations to adapt changes.
Consumers prefer to pay as per their convenience as now there are several options and ways has
come in the market like: Phone Pay, Pay tm and others. So, it can be said that mobile payment is
one of the current trend in retail sector which needs to be adapted by companies like Sainsbury’s
Tesco and others in order to provide convenience and satisfy needs of customers (Top Retail
Trend, 2020).
1

Figure 1: Retail trends
Sources: (Digital will continue to Disrupt Physical Retail in the UK, 2020)
From the above data, it can be said that 2019 year for retail companies was the worst year
because total sales in this year declined by .1% and 1.2 growth in the year of 2018. It shows that
retail sector companies like Tesco and others will have to face challenges in 2020 because of
technology and digitalization. Those companies who are best in physical store and retailers, they
will also have to make change in their strategies in order to make themselves competition as per
the changes in retail sector.
Retail industry analysis
Economic factors
In this context, it is stated that over the past ten years, economic output of retail sector
has fluctuated to the great extent. In the year of 2017 it was around £92.8 billion which is
considered as around 5.0 % of the UK’s total gross value added.
2

Figure 2 : Economic changes
Sources: (Retail Sector in the UK. 2018)
From the above it can be said that there is a fall in economy output of the UK and gradually it
made a growth but it was not effective. Financial crisis and other factors like shop closure,
changes in trends, employment loss affected on the economy to the great extent. In the year of
2013, this retail sector started to grow and improve the economy and till 2014 it grew strongly
and effectively. After some years in the year of 2017 again it started to grow less strongly.
Shop closure
3

Figure 3 Shop Closure in Retail
Sources: (Retail Sector in the UK. 2018)
In this context, it is analysed that approximate 28 retail companies with having multiples
stores in the UK have ceased trading in the year of 2018. It affected around 2,085 with 39,000
jobs lost. It is high number of affected stores and employment which affected on the UK
economy in a negative and to the great extent. In the retail sector one of the main retail which
affected the most was clothing as around 25% of clothing retail stores affected.
Analysis of Sainsbury’s
Sainsbury’s is one of the well-known supermarket chain and retailer in the UK. It is
second largest chain of supermarkets in the UK and one of the main reason of its position in the
market and retail industry is its qualitative products, varieties of products with effective pricing
strategy. This retailer was founded in the year of 1869 by John James Sainsbury. Headquarter of
this retailer in is London. It is stated that it has around 1,415 shops via which it provides services
and products to customers. Vision of this company is to become the most trusted retailer and
making an environment where people love to work and buy products as well. In addition, it is
also stated for making a position in the market it changes itself and its strategies as per the
4

changing environment (Background of Sainsbury’s, 2018). As per the current changing needs of
customers, it has made an effective use of digital marketing and delivering products and services
online to customers. With the help of its official website and other social media platforms it takes
feedbacks from customers in order to know its actual position in the market and how customers
view it and its services. By taking feedbacks it makes changes in its strategies accordingly which
makes customers feel valued. It is also stated that it focuses on satisfying employees by
providing them rewards and using effective management and leadership styles. On the flip side,
it is also stated that there are some external environmental factors which are creating barriers in
the path of its successful like financial crisis, Brexit, recent Covid-19, political instability of
some countries in which it operates. It also focuses on sustainability and uses effective strategies
to reduce all these problems.
SWOT analysis of Sainsbury’s
There are several internal environmental factors which can affect this retailer in both
positive and in negative manner. Making itself prepare for adapting changes and reducing
negative impacts it makes an effective use of SWOT analysis tool. It allows it to analyse internal
factors and make appropriate changes (Jiang and et.al., 2018).
Strengths
 One of the main strength of this retailer is it has made right expansion of business moves
which made it able to increase market shares. From small grocery stores it made large
supermarkets which now satisfy needs of customers.
 Low cost strategy is one of the main strength which allows it to attract customers and
having 2nd position in retail sector.
 It offers varieties of products for both males and females and it does not discriminate
customers in any manner.
 Ability to innovate products and services is other ain strength which allows it to take
competitive advantages and grow in the market.
Weaknesses
 There is a high bargaining power of customers which put pressure and risk for this
retailer of switching brand.
5

 Low profit margins in products and services can also create problems of lower profit. In
order to attract customers it provides products at lower price which is good for some
times bit not for the long term (SWOT Analysis of Sainsbury’s, 2019).
 Increment in procurement cost, minimum wage rate, raw material cost and rising in cost
of all other materials is other main weakness which is creating barriers.
Opportunities
 It is stated that Sainsbury’s has made right expansion moves and it expanded its business
in villages and rural areas and it gave opportunity to increase market share.
 Opportunity to cater all age group, gender, class of people is other main opportunity
which can support it to improve image in the eyes of customers.
Threats
 High intensity of competition in well-known brands and existing players like Tesco, Aldi
and others is the biggest threat.
 High bargaining power of customers is other main threat.
 Threats of substitute products by small retailers and groceries can decrease market share
and profit margin (FATRICIA, 2016).
Recommendations
From the above discussed strengths, weaknesses and all strategies used by Sainsbury’s it can be
said that there is requirement of making some changes in strategies and other in order to reduce
all weaknesses and threats. It is stated that there is a high intensity of competition in retail
industry and it is becoming difficult for this retailer to make stable position.
 So, in this context, it can be recommended to this retailer that it should focus on
penetration pricing strategy, it uses lower pricing strategy which is good and allows it to
attract customers but on the other side it is decreasing its profit margin. So, as per the
penetration pricing strategy, companies set their prices of products and services lower
initially as per the market condition and as compare to competitors (Chen and Zhu,
2018). After that it raises prices of products as per the market condition and comparison
of competitors.
 Other main strategy which needs to be focused by this company is it should buy laptops
at affordable prices in order to maintain online sales and delivery of products in an
6

efficient manner. Lack of affordable laptops which are leading retailers and can also
allow company to increase sales and profitability as well.
 It is stated that increment in prices of raw materials, wages and other can decrease its
profit margins so, it can be said that company should buy raw materials in bulk if they do
not scrap in some times. There are several raw materials who has long expiry dates so,
buying all those products in bulk it can prevent itself against increases cost and by this it
can increase its sales and profit margins.
 One of the other main weakness and threat is identified that customers in this sector has
more bargaining power and they can switch brands whenever they need to change. It is
important for this company to retain customers with the company for the long run and
increasing loyalty as well. For this, it can be recommended that it should focus on
providing benefits to customers like discounts, loyalty cards, coupons, bonus points, sale
on some products, providing primes services and offers as like Amazon provides. By
doing this, it can attract customers to the great extent, retain them and increase sales
because customers feel valued and special when they receive such benefits (De Vries and
Zhang, 2020).
Action Plan
It is one of the best way by company can make its self able to being in the market by reducing all
weaknesses and becoming competitive.
 Making changes in offers and discounts in order to attract customers and make them feel
valued.
 Providing each information on official website and solving customers queries or
grievance in a timely manner can help it out to become competitive.
 Providing post sale services to customers as Sainsbury’s offer electric products and
people face difficulties in operating them so by providing 24*7 customers services it can
retain customers (Agnihotri and et.al., 2017).
 By making changes in location as per the convenience of customers it can make changes.
 It is stated that it makes use of social media marketing but by more focusing on
promotional campaign it can make customers aware about effectiveness of features of its
products and services.
7

CONCLUSION
From the above study it has been concluded that SWOT analysis tool played a vital role
because it allows companies to analyse all internal factors and making changes in own strategies
according to impacts of factors. It has also shown some trends of retail sector of the UK as what
customers prefer and how their needs are getting changed, what are some factors associated with
changes in economic and environmental factors etc. Further, it has also shown importance fo
making an action plan as by which company can make changes in its strategies and take
competitive advantages.
8

REFERENCES
Books and Journals
Agnihotri, R. and et.al., 2017. Examining the role of sales-based CRM technology and social
media use on post-sale service behaviors in India. Journal of Business Research. 81.
pp.144-154.
Chen, F. and Zhu, D., 2018. Price Strategy and Network-Size Allocation Strategy in a Two-
Sided Monopoly Market. Available at SSRN 3146878.
Chhibber, P., 2019. Mentoring as a Practice for Nurturing the Personnel Performance a Study on
Retail Sector. Journal of the Gujarat Research Society. 21(8s). pp.663-673.
De Vries, E.L. and Zhang, S., 2020. The effectiveness of random discounts for migrating
customers to the mobile channel. Journal of Business Research, 110, pp.272-281.
FATRICIA, R.S., 2016. SWOT ANALYSIS OF SAINSBURY’S SUPERMARKET. Jurnal
Manajemen Terapan dan Keuangan. 5(1).
Jiang, R. and et.al., 2018. A SWOT analysis for promoting off-site construction under the
backdrop of China’s new urbanisation. Journal of cleaner production. 173. pp.225-234.
Online
SWOT Analysis of Sainsbury’s. 2019. [Online]. Available through
<https://www.marketing91.com/swot-analysis-of-sainsbury/>
Background of Sainsbury’s. 2018. [Online]. Available through <
https://www.about.sainsburys.co.uk/about-us/our-business-strategy>
Retail trends. 2020. [Online]. Available through <
https://www2.deloitte.com/uk/en/pages/consumer-business/articles/retail-trends.html>
Top Retail Trend. 2020. [Online]. Available through <
https://www.retailgazette.co.uk/blog/2020/01/top-retail-trends-to-expect-in-the-roaring-
2020s/>
Digital will Continue to Disrupt Physical Retail in the UK. 2020. [Online]. Available through <
https://www.emarketer.com/content/digital-will-continue-to-disrupt-physical-retail-in-
the-uk/>
9

Retail Sector in the UK. 2018. [Online]. Available through <
file:///C:/Users/user/Downloads/SN06186.pdf>
10