CASE ANALYSIS :

TESCO VS SAINSBURRY
Tesco Vs Sainsburry

PRESENTED BY
1. Rahmat Adil Indrawan 2. Syahrul Yaser 3. Rizka Ainaeny 4. Rinawan Wijaya 5. Restu Pratiwi 6. Yohannes W. Sudjana 7. Vitrio Wibisono 8. Widi Irawan 9. Nur Thalia Budi Utami 10. Mushashi Pangeran Batara Sitanggang

Tesco Vs Sainsburry

BACKGROUND

In 2009, UK retail sales were over 285billion and are growing, despite the economic downturn in 2007. During 2010, the industry created an extra 12,750 full-time jobs, a 2.1% increase on the previous year.
http://www.prospects.ac.uk/industries_retail_overview.htm

This industry is very much affected by economic condition, especially by inflation rate and employment.

Tesco Vs Sainsburry

HISTORY
Established 1869 by John James and Mary Ann Sainsbury 1922 J.sainsbury become private company J Sainsbury plc. 1973 Company become the largest floatation on London Stock Exchange 1995 Its surpassed in by Tesco 2003 It was pushed to third place by ASDA

Established 1919 by Jack Cohen 1924 Tesco brand first appear 1973 Jack cohen resigned, Lesli Porter Pile it high and sell it cheap 1977 launched Operation Checkout 1990 mid-sized food chain far behind its rival

Tesco Vs Sainsburry

GENERAL ENVIRONMENT
Supermarket retail is the largest industry in UK. Economics segment => retail industry affected by customer earnings. Supermarket industry is market oriented => customer is very important. Technology => customers more aware on technological innovation (internet base). Social culture => customer toward one stop and bulk shopping, more aware on healthy product. 5

Tesco Vs Sainsburry

GENERAL ENVIRONMENT
Economic relatively stable. Physical in 2005 Tescos buildings collapsed (city council rules), bbc.co.uk, 2006. Sociocultural customer toward one stop and bulk shopping, more aware on healthy and organic product Global retail industry is acceptable globally. Technological customers awareness on internet. Political Need-test 1996 and deleted in 2007 by government white-paper (thisismoney.co.uk, 2007).

Tesco Vs Sainsburry

COMPETITOR ENVIRONMENT
1990 beginning UK retail market become more competitive. Three player dominated the food market: Asda, Sainsbury, Tesco. Mid 1990 competition intensified as a price war among these player emerged Market entry of discounters : Aldi and Lidl
Tesco Vs Sainsburry

TYPE OF COMPETITOR

Tesco Vs Sainsburry

Low, own private brand & mas production

FIVE FORCES
High because of low switching cost

Supplier Power

Buyer Power

Online Store Traditional Market

Internal Rivalry

Intense

Substitute

Threat of New Entrants

High because of low entry barrier

Tesco Vs Sainsburry

TESCO SWOT
Strength 1. Highest market share in UK 2. All market segments 3. Wide demographic market 4. Innovative (club card, online store) 5. First mover Weakness 1. Abandoned Cohen philosophy pile it high and sell it cheap (stagnating bad image in 1977) 2. Too aggressive in expansion

Opportunity 1. Expand non food retail 2. Development of healthy and beauty products 3. International growth market

Threat 1. Restaurant business picking 2. ASDA international expansion 3. Product substitution 4. Intense price war

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SAINSBURRY SWOT
Strength 1. Mass & High End Market 2. Strong Brand (Early Established) 3. Store Network 4. Private Brand Weakness 1. Price 2. Declining Profitability 3. Lack of International Presence 4. Supply Chain Disruption

Opportunity 1. Expand the number of store 2. Expand product offering

Threat 1. Intense price war 2. Product Substitution

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The Tesco Way focus on people, both employees and customers

STORE FORMAT

Tesco store divided into : Tesco extra, Tesco superstores, Tesco Metro, Tesco Express and One Stop

Sainsburys SaveCentre Hypermarket format as joint venture with British Home stores

No separate Brand Operate with three formats: Regular Sainsburys Store,Sainsburys local Store, Sainsburys Central Store.

Tesco Vs Sainsburry

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BUSINESS LEVEL STRATEGY

TESCO
Integrated cost leadership/ differentiation strategy.

SAINSBURY
Differentiation high quality product 13

Tesco Vs Sainsburry

BUSINESS LEVEL STRATEGY/ FACT Asda = price leader followed by Tesco. Sainsbury = upper price segment, between mass market and high end. Tesco service offering: offer upper, medium, lowincome customers in the same store, investing in its own brand. This wide reaching demographics, reliability and trustworthiness keep shoppers return to Tesco. 14

Tesco Vs Sainsburry

BUSINESS LEVEL STRATEGY/ FACT

Tesco ditribution strategy: draw goods from suppliers into regional distribution centers for preparation and delivery to stores. Sainsbury distribution strat. : heavily invested in fully automated depot (4) ----- failed. Tesco Innovation: Club card. To gather consumer information, cater to specific potential customers need and wants. Sainsbury is a late followershowing no immediate response. Introduce multiparty card (Nectar) but its being worst card schemes offered.
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CORPORATE LEVEL STRATEGY

Tesco and Sainsburys do diversification strategy un related from food to non food (clothing, financial service, & telecommunication). Tesco has wider global market than Sainsbury.
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Tesco Vs Sainsburry

Tesco
to be a successful international retailer; to grow the core UK business; to be as strong in non-food as in food; to develop retailing services; and to put community at the heart of what we do Customer focus through Clubcard Employee focus

STRATEGY DEVELOPMENT
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Sainsbury
Healthy & green product at fair prices Accelerating the growth of complementary non-food and services Reaching more customer through additional channels Growing supermarket spaces Active property management Customer focus through questionaires Financial Policy : Cutting half of dividend Employee focus

STRATEGY DEVELOPMENT
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DISCOUNT STRATEGY

Cash Discount : Clubcard

Local segmented : Different price in different country

Tesco
Quantitative Discount : Buy 2 get 1 free, buy 3 for 2

Time Discount : Christmas, New year price cut after 6 pm

Promotional allowance : Buy 1 get 1 free

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DISCOUNT STRATEGY

Cash Discount : Reward Card

SAINSBURYS

Quantitative Discount

Promotional allowance : Discount after repositioning its place

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MAIN CAPABILITIES
Retailing diversified product Distribution channel Customer relationship management

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Addi$onal References
1. http://www.thisismoney.co.uk/news/article.html? in_article_id=420939&in_page_id=2 2. http://news.bbc.co.uk/2/hi/uk_news/5261844.stm 3. http://www.accountancyage.com/aa/news/1934865/tesco-sainsburysattack-lease-accounting-proposals

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