1. Executive Summary
• The UK food retailing market was expected to be worth £129 billion in 2010. By 2015, it is anticipated that the market will be worth £144.5 billion.
• Food retailing is a fiercely competitive market and in recent years, this has been particularly evident in regards to price in order to attract customers. They also have to be flexible in terms of their product mix to ensure they match consumer requirements to secure sales and remain competitive.
• Sainsbury’s appeared troubled in the early to mid-2000’s, but they appeared to have turned their business around in recent years.
• Sainsbury’s started the ‘make Sainsbury’s great again’ campaign in 2004. They made changes to their strategy to a more sales driven rather than a margin driven model, which they found unsustainable.
• Sainsbury’s felt that they did not meet consumer requirements in 2004 therefore created a strategy to enable customers to do their full weekly shop with them whatever their budget.
• As a result of a changing business model, Sainsbury’s was able to increase their revenue per full-time employee by 23% between 2006 and 2010, and become more efficient by the significant reduction of 52% in administration expenses.
• Sainsbury’s currently appear to be in a healthy situation according to their z score results. This puts them above Tesco, but below Morrisons (who have a smaller business model).
• The future looks bright for the food retailing market. Growth rates for the supermarkets over the 5 years appear very high; with Sainsbury’s at 32.7%, Tesco at 12.4% and Morrisons at 68.9%.
2. Question to be answered
This report will seek to analyse the revenue growth of Sainsbury’s in the second half of the 2000’s compared to its competitors and other available market data. The purpose is to assess how they changed their strategy from margin, to revenue growth in an industry with strong rivals and how they grew and impacted on profits, despite pressure on margin. The...