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J Sainsbury SWOT & PESTLE Analysis

ID : 52129853| Mar 2019| 19 pages

COMPANY PROFILE -J Sainsbury

Business Sector :Retail, Banking and Financial Services

Operating Geography :Europe, United Kingdom

About J Sainsbury :

J Sainsbury’s Plc was founded in the year 1869 by John James Sainsbury as a shop in London. By 1922 it engaged itself in food, clothing, merchandise and financial sectors. J Sainsbury’s Plc, headquartered in London, UK, operates under three main divisions namely, Sainsbury's Supermarkets Ltd, Sainsbury’s bank and Sainsbury’s Argos. As of Dec 2017, Sainsbury’s had 181900 employees.

Sainsbury’s market share is 15.8% making it the second largest supermarket chain in the UK, after Tesco- with a market share of 27.8%. Other top competitors of Sainsbury are ASDA and Morrisons with a market share of 15.3% and 10.4% respectively. While the competition continues to be high in the retail business, Sainsbury has a strategic plan in place for 2018 to outrace competition. Sainsbury’s investment of £150m to lower their price has brought productive results by improving their price position in key categories. The company is planning to invest in improving their food quality, in growing markets and stay committed to providing distinctive products. Their first launched baby food product “Little-ones” have obtained 15% of their baby food sales. Sainsbury is also planning to grow General Merchandise and Clothing and deliver synergies.

J Sainsbury’s Unique selling proposition or USP is having board portfolio of products around various segments from food to clothing, general merchandise to financial services, which it aims to sell at the lowest possible pricing. J Sainsbury’s Vision 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.” Sainsbury’s mission aims “To make all our customers’ lives easier every day by offering great quality and service at fair prices”.

J Sainsbury Revenue :


£m 26,224 million –(FY ending March 11th 2017) (y-o-y growth 11.56%)
£m 23,506 million- (FY ending March 11th 2016)

Ownership / Major shareholders :

Sainsbury's is one of the leading chain of supermarkets in the United Kingdom. Along with Tesco, ASDA, and Morrisons, Sainsbury forms the Big Four in the UK. As at 06 February 2018, the Company had been notified by the following investors of their interests in three per cent or more of the Company’s shares. Qatar Holdings LLC is one of the majority shareholders with 21.99% stake followed by BlackRock, Inc. holding 5.01% stake.

Competitive Analysis of J Sainsbury

SWOT
PESTLE

The SWOT / TOWS analysis of J Sainsbury Plc helps to evaluate the strengths, weaknesses, opportunities and threats in association with its business strategy and operations of the organization in the United Kingdom and global markets in the retail industry. The strengths and opportunities of Sainsbury’s should be used to compensate for the weaknesses and to develop a competitive strategy against the threats from rivals and competitors.

J Sainsbury Plc along with its subsidiaries and joint ventures offers a comprehensive range of products and services which include food, clothing, financial services, and general merchandise comprising of toys, stationery, homeware, and cookware. The vast portfolio of products and services creates a huge market share for the company and acts as one of its major strengths. Excellent advertising and marketing strategy, an experienced and dedicated employee base, self-branded products, and established network of outlets are some of the other key strengths of Sainsbury’s.

Losing market share to discount players and high debt levels led to profitability decline at Sainsbury’s over the past few years. Further Brexit worries have also weighed down on the share prices which hovered near its historic lows across 2016 and 2017. However with the recovery in the GBP and the Sainsbury-Asda deal in 2018 has helped the stock gain some ground in 2018.

Sainsbury’s has had a rollercoaster ride in terms of business and brand position. High competition from top brands (like Tesco, ASDA, and Morrisons), new entrants and local retailers has been a constant threat for Sainsbury’s to sustain its business model. With so many brands and retailers emerging in the market, it is quite challenging to provide consistent service along with new products for the consumers. The company relies totally on the UK market for business. This is a clear weakness of Sainsbury but if the Company looks forward for global expansion it can convert this weakness into a golden opportunity. The SWOT analysis for Sainsbury’s is essayed below in a matrix followed by the detailed analysis report:

Strengths
Weaknesses
1. Diversified business with strong market share
2. Strong balance sheet with consistent profitability
3. Differentiated food proposition with great quality
4. Great place to work at with employee diversity
1. Single operating market
2. Low margin food business
Opportunities
Threats
1. Global market expansion via online collaborations
2. Diversification and growth of Sainsbury’s bank
3. Online groceries and convenience stores - channels of future growth
4. Technology analytics to help in customer insights
1. Impact of Brexit on prices
2. Intense competition in grocery and retail segment
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Detailed SWOT Analysis of J Sainsbury

Strength

1. Diversified business with strong market share: Sainsbury’s is currently operating over 1200 supermarkets and convenience stores, online grocery and general merchandise operation which stands as one of its key strengths. It is also one of the largest merchandise and clothing retailers in the UK offerings its products across Sainsbury’s, Argos and Habitat brands. Along with this, J Sainsbury plc has property ventures with various other groups and together provides a range of quality banking and insurance products to the various segmented customers. With most of the big supermarket chains in United Kingdom struggling to maintain their existing market share, Sainsbury has moved to the 2nd spot with the market share of 16.9% and stands out as the company who is getting considerable sales and loyalty from customers when compared to its competitors.

2. Strong balance sheet with consistent profitability: Sainsbury’s has a robust balance sheet with a reduction of net debt of £349 million in FY16 to £1,477 million. The group enjoys a financing facility of £3.9 billion of which it has only used £2.7 billion. This facility is partly leveraged through the financial services division - Sainsbury’s Bank. The company has paid 10.2 pence per share in FY16 and over the last five years it has paid a cumulative £1.4 billion in cash dividends to shareholders, equivalent to 69.5 pence per share which shows its consistent profitability and shareholder returns. Sainsbury’s achieved £130 million in cost savings in FY16 is also on track to deliver the £500 million savings target by 2017/18 and has another £500 million cost savings target over three years from 2018/19 which will further aid profit margins.

3. Differentiated food proposition with great quality: Food and food products is a core part of its business and it offers more than 3,000 Sainsbury’s branded products in the segment including ready-made meals, gourmet bakery lines etc., which are quite appreciated by the customers. Customers have consistently rated Sainsbury for food quality ahead of its peers according to HPI Brand & Communications survey. It has launched innovative and in-demand products over FY16 such as Deliciously FreeFrom - allergen-free food range; On the Go - range of breakfast, lunch and snacking line; offering value to customers across segments. It is also the only supermarket offering gluten-free bread and a diverse vegetable range. Also keeping the customer’s healthy life in focus, Sainsbury’s has reduced sugar content in its cereals by 13% and more the three tons of salt content in canned beef products without altering the taste. Sainsbury’s is continuing to invest in the quality and price of by Sainsbury’s range which delivered a volume growth of 2% in FY16.

4. Great place to work at with employee diversity: Currently, Sainsbury’s group has more than 195,000 employees who provide great services to the customers. Since 2008 the company has employed over 27500 people in the YOUCAN scheme which is the proof of the company’s diversity and inclusion domain. The company is also a member of the Stonewall’s Diversity Champions program and aspires to be a leader in creating disability-friendly workplaces.

Weakness

This section is available only in the 'Complete Report' on purchase.

Opportunities

This section is available only in the 'Complete Report' on purchase.

Threat

This section is available only in the 'Complete Report' on purchase.

Major Competitors :

Asda, Morrisons, Aldi, Lidl, Waitrose, Marks & Spencer

Major Brands :

The holding company, J Sainsbury plc, is split into three divisions: Sainsbury's Supermarkets Ltd (including convenience shops), Sainsbury's Bank and Sainsbury's Argos. The group's head office is in Sainsbury's Support Centre in Holborn Circus, City of London. The group also has interests in property.
Major Brands under the holding company are:
  • Sainsbury's Fuel
  • Sainsbury's Café
  • Sainsbury's Local
  • Sainsbury's Online

Key Business Segments / Diversification :

J Sainsbury
Retail Online grocery Fuel Restaurants (Cafes) Banking

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Name
Business Segment
Year
Type
Objective/Synergy Achieved
NectarNectar-owner Aimia’s UK business2018AcquisitionSainsbury’s buys Nectar for £60m in move to take loyalty ‘to the next level’. The acquisition includes all assets, colleagues, systems and licences required for the wholesome and independent functioning of the Nectar loyalty programme in the UK. This will permit Sainsbury's to know their customers better. Nectar will be retained as a standalone scheme and the organisational structure of the business will initially remain intact.
Argos, Parent Company - Home Retail Group plcRetailer2016AcquisitionThe combination of Sainsbury‘s and Home Retail Group creates one of the UK‘s largest food and non–food retailers. The £1.4 billion takeover of Argos by Sainsbury's now operates as Sainsbury's Argos.
Bank of ScotlandBanking2013Acquisition Sainsbury's Bank was formed in 1997, as a joint venture between Sainsbury's and Bank of Scotland. In 2007, it became 50:50 joint ventures with Halifax Bank of Scotland, later Lloyds Banking Group. In 2013, Sainsbury's Bank took full control of the bank, further strengthening its financial services business and as part of developing complementary services to its existing supermarket business which would be a pivotal part of its long-term strategy for growth. Full ownership would allow future products to be more closely tailored to Sainsbury's customers, using Nectar card data to drive sales in both financial services and the core supermarket business.
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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WHY BUY THIS REPORT?
TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
The SWOT and PESTEL analysis report of the J Sainsbury Plc comprises of the following:
• Presents a perspicacity of the complex internal and external factors affecting the Sainsbury’s brand and its operations.
• A glance into the Company's ownership, revenue jumps, market valuation, share price trajectory, brands and major acquisitions, mergers and divestitures which have brought synergy in operations and business decisions.
• J Sainsbury’s case study which gives intelligence into Sainsbury's business model and how it manages to outstand competition.
• Summarization of the company’s business strategy, operations, and business divisions.
• A peak into Sainsbury’s brand portfolio, company information, company profile, USP or unique selling proposition, mission statement and vision statement.
• SWOT analysis evaluates the strengths and opportunities that Sainsbury’s has and how it strategizes itself to overcome its weaknesses and threats in its operating macro environment.
• Sainsbury’s external environment analysis highlighting the impact of political, economic, social, technological, legal and environmental factors on the company.
• Understanding of Core competitive advantages, Sainsbury has over its peers and competitors from the retail industry.
• Exposure to Sainsbury’s key performance indicators, success factors, value proposition and core competencies.
• Insights about micro and macro factors through internal and external analysis.
Copyrights and Disclaimer

J Sainsbury SWOT and PESTLE analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.

Copyright of J Sainsbury SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

J Sainsbury SWOT & PESTLE Analysis
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