In 2016, Sainsburys, the UK 's second largest food retailer completed the acquisition of Argos and Habitat in a move designed to increase its non-food offer and retail space. In 2018, it announced a possible merger with third placed rival Asda in a move designed to increase its buying power and market share to make 'Sainsdas' the biggest supermarket chain in the UK. Using Pestle and Swot, this report examines the food retailing industry in the UK to reveal the major macro trends and competitive forces driving and shaping it, resulting in losses and gains for different players.
Kush Jonathan (2018) "Pestle and Swot analysis of Sainsbury's 2017" 123 Writing [Online] at https://www.123writing.com/free-sample/pestle-and-swot-analysis-of-sainsbury%E2%80%99s-2017
Sainsburys sTRATEGY Case Study
Key Learning Outcomes
- Understand the broad macro-environment of Sainsburys supermarket and the UK food retailing industry in terms of political, economic, social, technological, environmental and legal factors (PESTEL/PEST/STEEPLE).
- Use our swot analysis example to gain an overall understanding of Sainsbury's strengths and weaknesses and strategic options arising from the opportunities and threats that have been identified from the Pestle analysis example on it's business environment.
- To apply strategy business models and frameworks such as Pestle/Pest/Steeple, Swot etc to real company cases.
Analyse the internal and external environment of Sainsbury's using SWOT & PESTLE 2017-2018
Sainsbury’s is currently the second biggest supermarket group in the UK with sales of £23.2bn for the year ending 2016 and a market share of around 14% behind main competitor Tesco. Together with Asda and Morrison’s, it makes up the UK Big Four oligopoly (Mintel 2016). Sainsbury’s customer profile is very similar to Tesco’s as they are both positioned as broad range superstores with strong non-food offers, and both pitched towards a lower EDLP. What this means is that Sainsbury’s is now focussed on offering Every Day Low Prices (EDLP) which is why it stopped its Brand Match offer in 2016, and nowadays does little vouchering and fewer promotions.
An overview of Sainsbury's current performance 2016-2018
The logic of Sainsbury’s £1.4bn takeover of Argos in 2016 is unclear to many given that Argos has problems (Armitage 2017). At a time when the company’s performance in food retailing has been less than stellar due to many factors, many industry observers argue the Argos deal will simply divert management time when it is most needed (Mintel 2016). Nevertheless, we believe that Sainsbury’s is better positioned than Asda in terms of coming to terms with competition from the two discounters Aldi and Lidl.
Using PESTLE, SWOT and Porters Five Forces analysis, the report will analyse why Sainsbury’s is well placed to handle a challenging food retailing environment in 2017 compared to rivals like Asda and Morrisons. Using SWOT, the report will look at the company’s core strengths such as Sainsbury’s reputation which has been built on quality and value for money, meaning it a trusted brand (Mintel 2016). Its purchase of Argos will also make for a stronger a non-food business which is still growing and thus will likely increase revenue. There already plans to convert 250 Argos outlets into Sainsbury’s stores over the next three years, an action that will be expensive and as will be discussed using PESTLE and SWOT, may yield little returns unless the company invests in a convenience format (Butler and Monaghan 2017).
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