Sainsbury’s Introduction:

Sainsbury’s supermarket is the UK’s third major best reputed foodstuff and
grocery chain of stores which opened first in 1869. The Sainsbury’s trademark,
manufactured with legacy of customers provided with robust, original and safe food.
Sainsbury’s has a strong significance in providing the fresh food and make every
effort constantly to innovate advance products to meet the consumer requirements.

Sainsbury’s at present serve over 18.5 million consumers in week and cover market
share of about 16%, offering more or less 30,000 commodities. Currently
Sainsbury’s have 537 supermarkets and 335 stores along with Sainsbury bank.

Sainsbury’s employs almost 150,000 people in 785 stores of UK and other

supporting staff. 60% of people work on part time basis making the employee
motivation a particular challenge. According to Justin King, CEO of Sainsbury’s
employee engagement and recognition is always important for them. Senior
management converse with all members of staff openly and sincerely pay attention
and reply to them. “Talkback” workforce engagement survey, use as a method to
study the feedback from each member of staff together with “Tell Justin” ideas
and proposal scheme. This plan appeals from each member of workforce to present
their proposal about how to improve their own business. According to 2009 report of
Sainsbury so far 25,500 ideas have been received. Following graphical
representation gives us an idea that employee engagement is consistently used by
Sainsbury’s as an important motivational tool.
 Fig: 1.2- Talkback engagement result

Source: [http://www.jsainsburys.co.uk]

Similarly one of the store of Camden located in north London have developed
flexible working hour’s system in bakery department. The workforce of bakery
department is agreed to rotate their hours each week. This system was put in place
in 2007 and after that bakery sale has raised up to 65% and workforce engagement
in particular department increased by 10%. In 2008/09 the management of
Sainsbury’s has reviewed its health and safety culture. In this regard management
has begun “safe and sound” programme across all the retail stores with the aim of
promotion and training of safety training programs. By introducing such types of
safety programs Sainsbury’s has less number of workforce mishaps near 26.4%
during last three years (www.j-sainsbury.co.uk)

SAINSBURY’S CHAIRMAN STATEMENT:

“The Board is pleased with the performance of Sainsbury's over the last
year. We delivered good profit growth and underlying earnings per
share were up over 12 per cent. Our progress in achieving strategic
objectives has been very encouraging, especially in increasing our
selling space and widening the range of our complementary non-food
offer. At the same time, the values of the organisation have continued
to underpin everything we do, with our continued focus on customer
service and responsible trading” (j-sainsbury.co.uk/chairman.shtml)

CORPORATE OBJECTIVES OF COMPANY:

The management of Sainsbury’s have recognized five areas for growth:

1-Great Food at Fair Prices:

With the contribution of consumer’s enthusiasm for healthy, brand new and safe
food Sainsbury’s will continue to improve its quality food and distribute its quality
products at reasonable cost.

2-Growth of non-food products:

To carry on the same development and increase in non-food products Sainsbury’s

will follow the same standard of quality and provide great improvement in products
for customers.

3-More consumers through other means:

To increase the number of consumers and their reach up to Sainsbury’s brand, the
management will open new ease stores and build up the new online home
deliverance functions.

4- Supermarket space:

For better food offers and non-food products it is necessary to enlarge the
company’s store land and increase the channels of new stores.

5- Dynamic property management:

The active property management and possession of land resources will provide
working flexibility and maximize the value (www.j-sainsbury.co.uk)
PEST ANALYSIS:

PEST EXPLANATION
FACTOR
S

Political Taxation – all worker get taxed a certain amount depending on

their tax code

Salary/wages – workforce normally get paid much more than

they would working for a similar type of superstore overseas.
Business in the UK must conform to the minimum wage i.e.
Over 18s get £5.90 and after 26 weeks this goes up to £6.39.
There are also laws on the number and duration of breaks (15
minutes every 3 hours).

Working hours - For school children (year 11’s +) they can

only work 2 hours on a school Day, 6 hours on a Saturday and
2 on a Sunday.

Confidentiality – must conform through the Data Protection Act

and should follow following laws:

 Sex Discrimination Act 1975

 Equal Pay Act 1970
 Race Relations Act 1976
 Disability Discrimination Act 1995
 Employment Equality (Religion or Belief) Regulations 2003
  Health & Safety at Work Act 1974

Recession (people stop spending) – may possibly result in job

losses (redundancies)
Economi
c Inflation (prices rise) – If prices go up Sainsbury’s may be
incapable to renovate present stores or open new ones.

Unemployment levels – The management may present funding to

promote Sainsbury’s to open in a region where redundancy is high.
They may publicize job in job centers as they aware that job would
be sighted by a large group of jobless community.

Income – possible workers are bound to be involved in their

salary/wage and holidays more than everything else.

Interest rates – if the interest rate rise Sainsbury’s may reduce the
level of loan and keep more income (put money they have made
back into the business). They need to make sure they have
sufficient cash to pay for the employment and selection procedure.

Labor costs - Sainsbury’s need to attempt and stay inside the

financial plan because they also have to consider the time and
money needed to undertake each part of the recruitment and
 selection process.

Skill level of workforce – when employed Sainsbury’s has to

decide whether particular ability and experience are require for
workers to carry out their function. They must also take into
account the frequency and level of training they would need, as well
as the time it will take for them to complete it. Most training takes
place at some stage in the initiation time.

Extensive accessibility and high speed internet - online

shopping is the standard for these days. For this reason,
Technolo
Sainsbury’s has had to utilize a larger number of citizens to
gical
handpick orders at distribution centers/warehouses, pack them
and deliver them directly to customer’s homes.

Self checkout tills – you can scan your own shopping and
pay for it yourself and leave. Managers expect and examine
their usage to anticipate and plan the schedule for the quantity
of checkout workforce required throughout the day.
Sainsbury’s has to take the following issues into explanation
when recruiting and deciding where to setup a new store:
Social • Demographic trends – whether or not staff would be
willing to transfer to another store if necessary.
• Levels of education – the likeliness of staff wanting to
fill graduate or managerial place to plan training
curriculum and suitable reward systems.
• Lifestyles – the type of service and level of contact
consumers and prospective consumers might like.
• Attitudes to work and leisure – consider the
workforce psychological health and well being to a
certain degree, by offering flexible working methods and
hours e.g. shifts and job rotation
• Culture, class and fashion – be careful to modify job
vacancies to a definite target market sector to attract
the ‘right’ type of candidates

Financial performance

On 4 October 2007 Sainsbury's announced plans to relocate its Store Support

Centre from Holborn to Kings Cross in 2011. The new office will be part of a
new complex to allow for both cost savings and energy efficiency. These
savings will be made through the use of efficient building materials and
design, a combined heat and power energy centre and the use of renewable
energy sources.

In January 2008 Sainsbury's brought its number of Northern Ireland

supermarkets to 11 with the purchase of two Curley's Supermarkets in
Duncannon and Belfast, which includes those stores' petrol stations and off
license.

In March 2009 Sainsbury's announced it was buying 24 stores from The Co-
operative, 22 of which were Somerfield stores and the remaining 2 were Co-
op stores: these are part of their estate which The Co-operative were
required to sell following the completion of the Somerfield takeover.

A further 9 stores were purchased from The Co-operative in June 2009. These
were concentrated in west Wales, the north of England and Scotland where
Sainsbury's market share is low. In November 2007, Sainsbury centralized
their HR department, relocating to the 17th and 18th floors of Manchester's
Arndale Centre to form a Shared Service Centre which was initially trialed to
deal with Recruitment in Scotland and was later rolled out to the whole
country.

July 2009 saw the HR Shared Service Centre in Manchester expand to include
most HR Processes in their Colleague Administration Department and
Occupational Health enquiries in a dedicated unit.

In Late 2009, Sainsbury's moved from a "Think 21" to "Think 25" policy for
the sale of age restricted goods. This sees them move in line with most other
retailers.

In May 2010 Justin King announced that Sainsbury's pledged to involve each
of its 850 stores in the promotion of the Paralympics after the multimillion-
pound deal with Logo to be the main sponsor of the London 2012
Paralympics games. The sum was not disclosed. Sainsbury’s will sell
Paralympics’ merchandise and become involved in high-profile events such
as the torch relay. It will be one of only two sponsors able to take advantage
of the limited branding allowed within the Games. The promotional rights do
not extend to the Olympics.

Planning Strategy:

- Marketing aim - to help customers change the “way” they shopped rather
than “where” they shopped - i.e. to hold onto market share rather than
losing share to the growing budget retailers. This one is really important for
students. Customer loyalty is vital in the intensely competitive grocery
market - supermarkets had to respond to the growing demand for lower-
priced goods at a time when consumer confidence was lower

- Clear segmentation of the different own-label product ranges - making full

use of the marketing mix to differentiate each of the three own-labels

- Attractive sales promotions on popular branded goods (working in

partnership in doubt with the branded food producers)

- Greater use of money-off vouchers (as an alternative for customers who

don’t use the Nectar loyalty scheme)

- Advertising focus on fresh food and quality

Financial Analysis:

Some of major accounts defined below:

1- Profit and Loss Account

The reason of the profit and loss account is to:

• Show whether a industry has made a PROFIT or LOSS over a fiscal

year.
• Describe how the profit or loss arose – e.g. categorizing expenses
between “cost of sales” and operating costs.

A profit and loss account starts with the TRADING ACCOUNT and then
takes into account all the other expenses associated with the business.

Trading account

The trading account shows the income from sales and the direct costs of
making those sales. It includes the balance of stocks at the start and end of
the year. (tutor2u.net)

BALANCE SHEET

£m

 Non-current assets 8442

 Current assets (including assets held for sale) 1591

 Current liabilities (2919)

 Non-current liabilities (2738)
 Net assets 4376
 Equity attributable to equity holders of the parent 501

 Share Premium Account 909

 Capital Redemption Reserve 680

 Retained Earning less other Reserve 2286

 Total equity 4376

Cash Flow Statement:

 £m

 Cash generated from operations 1206

 Interest paid ` (128)
 Corporation tax paid (160)
 Net cash from operating activities 918

 Net cash used in investing activities

(879)
 Cash flows from financing activities
 Dividends paid (218)
 Other net cash flows from financing activities 177
 Net cash from financing activities (41)

Ratio analysis:
http://tutor2u.net/business/gcse/finance_profit_and_loss_account.htm