Sainsbury's

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J Sainsbury plc
Type	Public (LSE:SBRY)
Founded	1869
Headquarters	Holborn, London, UK
Key people	Justin King, CEO Philip Hampton, Chairman
Industry	Retail (Grocery)
Products	Supermarkets, banking
Revenue	£16,061 million (52 weeks to 25 March 2006).
Operating income	£267 million
Net income	£58 million
Employees	153,000 (2006)
Subsidiaries	Sainsbury's Bank Sainsbury's Supermarkets Ltd.
Website	www.j-sainsbury.co.uk

J Sainsbury plc is the parent company of Sainsbury's Supermarkets Ltd, commonly known as Sainsbury's, a chain of supermarkets in the United Kingdom. The group also has interests in property and banking. The group has a stock market valuation of about £6 billion (October 2006). ^{[citation needed]}

For much of the twentieth century Sainsbury's was the market leader in the UK supermarket sector. However in 1995 it lost its place as the UK's largest grocer to Tesco and in 2003 was pushed into third by ASDA. The company's fortunes have improved since the launch of a recovery programme by CEO Justin King in 2004. Despite predictions that Sainsbury's would regain second position and a narrowing of ASDA's lead in recent months, the latest figures released by Taylor Nelson Sofres in October 2006 showed Sainsbury's losing share slightly, from 15.9% to 15.7% compared to ASDA's 16.6%. Tesco's share was 31.4% and Morrisons' 11.1%. ^[1]

Contents 1 History 1.1 2000-2004: Peter Davis 1.2 2004 onwards: Justin King 2 Financial performance 3 Store formats 3.1 Convenience stores 4 Product ranges 5 Advertising 6 Sainsbury's Staff 7 Sainsbury's Bank 8 Sainsbury family 9 References 10 External links

[edit] History

Sainsbury's was established as a partnership in 1869 when John James Sainsbury and his wife Mary Ann opened a store at 173 Drury Lane in Holborn, London. In 1922 J Sainsbury was incorporated as a private company. The first self-service branch opened in Croydon in 1950. In 1973 the company was floated as J Sainsbury plc in what was at the time the largest ever flotation on the London Stock Exchange. Today the family retain less than 20% of the shares.

In 1975, Sainsbury's launched the "Sainsbury's SavaCentre" hypermarket format as a joint venture with BHS. This was the first attempt to launch supermarkets with a large non-food range in the UK. Savacentre became a wholly owned Sainsbury's subsidiary in 1989. As the hypermarket format became more mainstream, with rivals such as ASDA and Tesco launching ever-larger stores, it was decided that a separate brand was no longer needed and the stores were converted to the regular Sainsbury's superstore format in 1999. This is in direct contrast to rival firms Tesco and ASDA, which have been rapidly expanding their Tesco Extra and ASDA Wal-Mart Supercentre hypermarket formats in recent years.

Sainsbury's founded the Homebase DIY chain in 1979. Homebase was tripled in size in 1995 with the acquisition of the rival Texas Homecare from the Ladbroke Group Plc. Sainsbury's sold the Homebase chain in December 2000 in a two-fold deal worth £969 million. Sales of the chain of stores to venture capitalist Schroder Ventures generated £750 million and sale of 28 development sites, which had been earmarked for future Homebase stores, were sold for £219 million to rival B&Q's parent company, Kingfisher plc. At the time, the chain had 13% of the UK market, behind B&Q and Focus Do It All.

In November 1983 Sainsbury's purchased 21% of Shaw's Supermarkets, the second largest grocery group in the northeast United States. In June of 1987, Sainsbury's acquired a controlling interest. Despite good performance by Shaw's, Sainsbury's sold the group on 30 April 2004.

In June 1995 Sainsbury's announced its intention to move into the Northern Ireland market, until that point dominated by local companies.^[2] Between December 1996 and December 1998 the company opened seven stores. Two others at Sprucefield, Lisburn and Holywood Exchange, Belfast would not open until 2003 due to protracted legal challenges. Sainsbury's move into Northern Ireland was undertaken in a very different way from that of Tesco. While Sainsbury's outlets were all new developments, Tesco (apart from one Tesco Metro) chose instead to purchase existing chains from Associated British Foods (see Tesco Ireland).

In March 1997 Sainsbury's Supermarkets Ltd. was established as a separate subsidiary of the group.

In 1999 Sainsbury's acquired an 80.1% share of Egyptian Distribution Group SAE, a retailer in Egypt with 100 stores and 2,000 employees. However poor profitability lead to the sale of this share in 2001. ^[3]

On 29 September 2004, Sainsbury's set up Sainsbury's Convenience Stores Ltd. to manage its Sainsbury's Local branded stores and other relevant stores such as Bells, Jacksons and other acquired chains.

[edit] 2000-2004: Peter Davis

Sir Peter Davis replaced Dino Adriano as CEO in March 2000 in what was seen as an attempt to regain market position. If he is judged on that aim, then he can be said to have failed, as Sainsbury's was demoted to third in the UK grocery market during his term. In his first two years he raised profits above targets, however the by 2004 the group had suffered a decline in performance relative to its competitors and a loss of market share. Davis also oversaw an almost £3bn upgrade of stores, distribution and IT equipment, but his successor would later reveal that much of this investment was wasted and he failed in his key goal - improving availability.

In 2001 Sainsbury's moved into its current headquarters at Holborn, London. Sainsbury's previously occupied Stamford House and 12 other buildings around Southwark. The building was designed by architectural firm Foster and Partners and had been developed on the former Mirror Group site for Andersen Consulting (now Accenture), however Sainsbury's acquired the 25 year lease when Accenture pulled out.

Sainsbury's is a founding member of the Nectar loyalty card scheme, which was launched in autumn 2002 in conjunction with Debenhams, Barclaycard and BP. The Nectar scheme replaced the Sainsbury's Reward Card; accrued points were transferred over.

In 2003 Wm Morrison Supermarkets made an offer for the Safeway group, prompting a bidding war between the major supermarkets. The Trade and Industry Secretary, Patricia Hewitt, referred the various bids to the Competition Commission which reported its findings on September 26th. The Commission found that all bids, with the exception of Morrisons, would "operate against the public interest". As part of the approval Morrisons was to dispose of 53 of the combined group's stores. In May 2004 Sainsbury's announced that it would acquire 14 of these stores, 13 Safeway stores and 1 Morrison outlet located primarily in the Midlands and the north of England. The first of these new stores opened in August 2004.

At the end of March 2004 Davis was promoted to chairman and was replaced as CEO by Justin King. In June 2004 Davis was forced to quit in the face of an impending shareholder revolt over his salary and bonuses. Investors were angered by a bonus share award of over £2m despite poor company performance. On July 19, 2004 Davis' replacement, Philip Hampton, was appointed as chairman. Hampton has previously worked for British Steel, British Gas, BT and Lloyds TSB.

[edit] 2004 onwards: Justin King

Justin King joined Sainsbury's from Marks and Spencer plc where he was a director with responsibility for its food division and Kings Super Markets, Inc. subsidiary in the United States. ^[4] King was also previously a managing director at Asda with reponsibility for hypermarkets.^[4]

King ordered a direct mail campaign to 1 million Sainsbury's customers as part of his 6 month business review asking them what they wanted from the company and where the company could improve. This reaffirmed the commentary of retail analysts - the group was not ensuring that shelves are fully stocked, this due to the failure of the IT systems introduced by Peter Davis. On October 19, 2004 King unveiled the results of the business review and his plans to revive the company's fortunes. This was generally well received by both the stock market and the media. Immediate plans included laying off 750 headquarter staff and the recruitment of around 3,000 shopfloor staff to improve the quality of service and the firm's main problem: stock availability. At the same meeting Lawrence Christensen, the newly appointed supply chain director and an expert in logistics, highlighted the reasons for availability issues and his plan to address them. Immediate supply chain improvements included the reactivation of two distribution centres. Another significant announcement was the halving of the dividend to increase funds available for price cuts and quality.

King has appointed successful industry figures to the company; Lawrence Christensen is formerly from Safeway, Mike Coupe joined from Asda and Tesco as trading director, Gwyn Burr joined as head of customer service, Ken McMeikan joined in 2005 as Retail Director, was a rising star within Tesco.

Sainsbury's sold its American subsidiary, Shaw's, to Albertsons in 2004. ^[5] Also in 2004 Sainsbury's expanded its share of the convenience store market through acquisitions. Bell's Stores, a 54 store chain based in north east England was acquired in February 2004. ^[6] Jackson's Stores, a chain of 114 stores based in Yorkshire and the North Midlands, was purchased in August 2004. ^[7] JB Beaumont, a chain of 6 stores in the East midlands was acquired in November 2004. ^[8] SL Shaw Ltd, which owned six stores was acquired on 28 April 2005 for £6 million. ^[9]

Since the launch of King's recovery programme the company has reported seven quarters of sales growth, most recently on 11 October 2006 when it announced sales growth of 7.6%.^[10] In January 2006 Sainsbury's reported serving 19 million customers in the week before Christmas, the highest ever for a single week. Early sales increases were credited to solving problems with the company's distribution system. ^[11] More recent sales improvements have been put down to price cuts and the company's focus on fresh and healthy food. ^[12]

According to the latest Taylor Nelson Sofres rankings published in October 2006, Sainsbury's market share was 15.7% compared to Tesco's 31.4%, ASDA's 16.6% and Morrison's 11.1%. ^[1]

[edit] Financial performance

Year end	Sales(£m)	Pre tax profit(£m)	Profit for year(£m)	Basic eps (p)
25 March 2006¹	16,061	104	58 ³	3.8
26 March 2005¹	15,409	15	614	3.5
27 March 2004¹	17,141	610	396	20.7
29 March 2003¹	17,079	667	454	23.7
30 March 2002¹	17,162	571	364	19.1
31 March 2001¹	17,244	437	276	14.5
1 April 2000¹	16,271	509	349	18.3
3 April 1999²	16,433	888	598	31.4
7 March 1998¹	14,500	719	487	26.1
8 March 1997¹	13,395	609	403	22.0
9 March 1996¹	12,672	712	488	26.8
11 March 1995¹	11,357	809	536	29.8
12 March 1994¹	10,583	369	142	8.0
13 March 1993¹	9,686	733	503	28.5
14 March 1992¹	8,696	628	438	25.7
16 March 1991¹	7,813	518	355	23.6
17 March 1990¹	6,930	451	314	20.8

1. denotes 52 weeks
2. denotes 56 weeks.
3. "One off operating costs" of £152 million incurred. This includes £63 million to terminate the IT outsourcing contract with Accenture.
4. £168 million before exceptional costs (cost of "turnaround" plan and write off of excess merchandise etc.)

[edit] Store formats

The supermarket chain operates three main store formats; regular Sainsbury's stores, Sainsbury's Local (convenience stores) and Sainsbury's Central (smaller supermarkets in urban locations) stores. At the end of its 2005/06 financial year Sainsbury's store portfolio was as follows. ^[13]

Format	Number	Area (ft²)	Area (m²)	Percentage of space
Supermarkets	455	15,916,000	1,467,000	95.1%
Convenience stores	297	821,000	76,000	4.9%
Total	752	16,737,000	1,543,000	100.0%

Sainsbury's currently uses NCR Point of Sale equipment operating the Retalix "Storeline" software, replacing their previous Fujitsu-ICL POS systems that Sainsbury's used during the 1990s.

[edit] Convenience stores

Sainsbury's and Tesco are the only two major chains to operate convenience stores, Asda and Morrisons do not currently have presence in this area of the market. As well as its own Local and Central stores Sainsbury's has expanded through acquisition of existing chains (Bell's Stores, Jackson's Stores, JB Beaumont, and SL Shaw Ltd). Sainsbury's has retained the strong Bells and Jacksons brands. For example, refurbished stores would be called Sainsbury's at Bells or Sainsbury's at Jacksons. These are effectively Sainsbury's Local stores with a revised facia, retaining some features of the former local chain. Unrefurbished stores retain the original brand and logo, but still offer Sainsbury's own brand products, pricing and some point of sale, without accepting Nectar cards. The old websites are also retained with some Sainsbury's branding. This is still an experimental format and may become Sainsbury's Local if it is ever felt that the old brands are no longer an asset.

[edit] Product ranges

A large store typically stocks around 50,000 lines of which around 50% are "own-label" as opposed to branded goods. These own-brand lines include:

• Basics: an economy range of around 500 lines, mainly food but also including other areas including toiletries and stationery. The Basics range uses minimal packaging with simple orange and white designs, to keep the price as low as possible. Equivalent to Tesco's Value range and ASDA's Smartprice.
• Taste the Difference: around 1100 premium food lines, including many processed foods (such as ready meals and premium bakery lines. Similar to Tesco Finest and Morrison's The Best.
• Different by Design: a smaller range focusing on flowers and replacing the previous "Premium" flower range braned "Orlando Hamilton".
• Kids: these lines are for children. In 2006 these lines replaced the Blue Parrot Café range.
• Be Good To Yourself: products with reduced calorific or fat content.
• Free From: around 150 product lines.^{[citation needed]} These products are suitable for those allergic to dairy products. (The majority of these are dairy and gluten/wheat free)
• Sainsbury's Organic (SO Organic): Around 500 lines of food / drink which is not derived from food stuffs treat with firtiliser or pesticides.

[edit] Advertising

Since 2000 Jamie Oliver has been the public face of Sainsbury's, appearing on television and radio advertisements and in-store promotional material. The deal earns him an estimated £1.2 million every year. In the first two years these advertisements are estimated to have given Sainsbury's an extra £1 billion of sales or £200 million gross profit. ^[14]

Sainsbury's currently uses the "Try something new today" slogan which was launched in an effort to make consumers venture into purchasing more varied goods. Over the years, Sainsbury's has used many slogans:

• "Quality perfect, Prices Lower" The slogan used on the shopfront of the Islington store in 1882.
• "Sainsbury's For Quality, Sainsbury's For Value"- Used in 1918 above the Drury Lane store.
• "Good Food Costs Less At Sainsbury's" — Used from the 1960s to the 1990s. Described by BBC News as "probably the best-known advertising slogan in retailing." ^[15]
• "Sainsbury's - Everyone's Favourite Ingredient" — Used in a series of TV commercials in the 1990s which featured celebrities cooking Sainsbury's food.
• "Fresh food, fresh ideas"
• "Value to shout about" — A 1998/1999 campaign fronted by John Cleese which was widely claimed to have been a major mistake. Sainsbury's said it actually depressed sales. However, the company had been losing sales for years because of the rise of rival Tesco. ^[16]
• "Making Life Taste Better" — Axed in May 2005. Replaced on carrier bags, till receipts etc in September 2005 by "Try something new today".

[edit] Sainsbury's Staff

Sainsbury's divides its staff into different sections across the store.

These will generally be Produce, Fresh Foods, Grocery, Counters, stock control, warehouse, Beers Wines & Sprits (known as BWS), Checkouts and Trolleys. They also have a Personnel department inside each store for staff use as well as further departments higher up the hierarchy.

Sainsbury's believes in multi-training its staff so that they can be borrowed by other departments. The main use of this is with checkouts. The majority of staff regardless of their department will be checkout trained so they can operate a checkout in times of high queues or to cover staff lunches.

Other than checkouts the most critical department is Produce. This team of individuals is involved in filling up the front of the store and the section which empties quickest. It is important that this section is kept full and tidy as it represents the company's image to those entering and leaving the store.

Within departments staff are given certain titles. General employees are at the bottom of the section with CTS (customer trading support) staff (who are basically deputy managers) next. They are followed by Managers. Duty Managers and Store Managers are store based and govern all departments. They are below Regional Managers.

[edit] Sainsbury's Bank

Main article: Sainsbury's Bank

In 1997 Sainsbury's Bank was established - a joint venture between J Sainsbury plc. and the Bank of Scotland (now HBOS).

Services offered include car, life, home, pet and travel insurance as well as health cover, loans, credit cards, savings accounts and ISAs.

[edit] Sainsbury family

Today there is little family involvement in the company. David Sainsbury's retirement as Chairman in 1998 brought to an end 129 years of management of the group by the Sainsbury family. As a government minister since 1998, his shares are held in a blind trust.

The Sunday Times reported in September 2006 that "The Sainsbury family continues to [sell] shares in the £6.2 billion retailer that bears their name — and for the first time their combined holding has fallen below 20%."^[17] This fall from around 35% increases the possibility of any takeover attempt succeeding. However a hostile bid for the company may encounter difficulties, without the full support of the Sainsbury family. The halving of the generous dividend yield in recent years, may be have been a significant factor regarding the family's decision to reduce their shareholdings.

• John James Sainsbury (married Mary Anne Staples)
  • Alan John Sainsbury (1902-1998), son of John's son John Benjamin Sainsbury, a life peer 1962 as Lord Sainsbury
    • John Davan Sainsbury (1927-), a Tory life peer (Baron Sainsbury of Preston Candover)
    • Simon Sainsbury (1930-2006) quiet philanthropist who gave away £100 million. ^[18]
    • Timothy Sainsbury, former Tory minister, married to Lady Sainsbury (1932-)
      • Camilla Sainsbury, daughter of Timothy, married to Conservative, then Labour, MP Shaun Woodward
  • Robert Sainsbury (1907-2000), son of John Benjamin Sainsbury, who along with his wife Lisa began the collection of modern and tribal art housed at the Sainsbury Centre for Visual Arts, Norwich
    • David Sainsbury (1940-), Labour life peer (Baron Sainsbury of Turville)
      • Clare Sainsbury, daughter of David Sainsbury, wrote "Martian In The Playground", to help people understand more about Asperger's Syndrome
    • Annabel Sainsbury, married name Annabel Kanabus, director of the HIV/AIDS charity AVERT.

[edit] References

[edit] External links

• Sainsbury's consumer website
• J Sainsbury plc corporate website