Sainsbury's

J Sainsbury plc

File:JSainsbury.PNG
Company type	Public (LSE:SBRY)
Industrie	Retail (Grocery)
Gegründet	1869
Hauptsitz	Holborn, London, UK
Key people	Justin King, CEO Philip Hampton, Chairman
Produkte	Supermarkets, banking
Revenue	£16,061 million (52 weeks to 25 March 2006).
Operating income	£267 million
Net income	£58 million
Number of 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 an estate worth about £6 billion (October 2006).

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%.

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; the company rewarded the smaller bids for shares in order to create as many shareholders as possible. Today the family retain at least 14% 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.

The last counter service branch closed in 1982. In November 1983 Sainsbury's purchased 21% of Shaw's Supermarkets, the second largest grocery group in the north-east 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 1992 the long-time CEO John Sainsbury retired and was replaced by his cousin, David Sainsbury. In 2004 The Times quoted a former executive and others who view this event as the start of the company's downturn due to management failures of David Sainsbury and his successors, Dino Adriano and Peter Davis. Mistakes cited include David Sainsbury's famous dismissal of Tesco's loyalty card, the reluctance to move into non-food retailing, the indecision between Sainsbury's quality/price positon, "the sometimes brutal treatment of suppliers" which lead to suppliers favouring Tesco over Sainsbury's and the unsuccessful John Cleese advertising campaign.

Sainsbury's expanded its operation North of the border, with its first Scottish store (Darnley) opening in January 1992. In June 1995 Sainsbury's announced its intention to move into the Northern Ireland market, until that point dominated by local companies. 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).

Old Sainsbury's logo used from the 1960s to 1999

File:Sainsbury's.png

Current Sainsbury's logo

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

In June 1999 Sainsbury's unveiled its new corporate identity, which compromised the current logo created by 20/20 design (right), new corporate colours of "living orange" and blue, Interstate as the company's general use font, the M&C Saatchi strapline "Making life taste better" and new staff uniforms. The strapline was dropped in May 2005 and replaced in September of that year by "Try something new today." While the Interstate font was used almost exclusively for many years, the introduced another informal font in 2005 which is used in a wide range of advertising and literature.

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. On 8 October 1999 the CEO Dino Adriano lost control of the core UK supermarket business, instead assuming responsibility for the rest of the group. David Bremner became head of the UK supermarkets. This was "derided" by the city and described as a "fudge". On 14 January 2000 Sainsbury's reversed this decision by announcing the replacement of Adriano by Sir Peter Davis effective from March.

2000-2004: Peter Davis

Davis' appointment was well received by investors and analysts. 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 was demoted to third in the UK grocery market. Davis also oversaw an almost £3 billion 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. Part of this investment saw the construction of four fully automated depots, which at £100 million each cost four times more than standard depots.

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 26 September. 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 19 July 2004 Davis' replacement, Philip Hampton, was appointed as chairman. Hampton has previously worked for British Steel, British Gas, BT and Lloyds TSB.

2004 onwards: Justin King

J Sainsbury HQ in Holborn Circus

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. King was also previously a managing director at Asda with responsibility for hypermarkets.

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 19 October 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 headquarters staff and the recruitment of around 3,000 shop-floor staff to improve the quality of service and the firm's main problem: stock availability. Another significant announcement was the halving of the dividend to increase funds available for price cuts and quality.

King hired Lawrence Christensen as supply chain director in 2004. Previously at Safeway he is an expert in logistics. Immediate supply chain improvements included the reactivation of two distribution centres. In 2006 Christensen commented on the four automated depots introduced by Davis, saying "not a single day went by without one, if not all of them, breaking down... The systems were flawed. They have to stop for four hours every day for maintenance. But because they were constantly breaking down you would be playing catch up. It was a vicious circle." Christensen said a fundamental mistake was to build four such depots at once, rather than building one which could be thoroughly tested before progressing with the others. In 2007 Sainsbury's announced a further £12 million investment in its depots to keep pace with sales growth and the removal of the failed automated systems from its depots.

Sainsbury's sold its American subsidiary, Shaw's, to Albertsons in 2004. 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. Jackson's Stores, a chain of 114 stores based in Yorkshire and the North Midlands, was purchased in August 2004. JB Beaumont, a chain of 6 stores in the East midlands was acquired in November 2004. SL Shaw Ltd, which owned six stores was acquired on 28 April 2005 for £6 million. On 29 September 2004, Sainsbury's established Sainsbury's Convenience Stores Ltd. to manage its Sainsbury's Local stores and the Bells and Jacksons chains.

Since the launch of King's recovery programme the company has reported eight consecutive quarters of sales growth, most recently in January 2007. Early sales increases were credited to solving problems with the company's distribution system. More recent sales improvements have been put down to price cuts and the company's focus on fresh and healthy food.

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%.

Takeover bid

On 2 February 2007, following the sale of a 2.1% stake in Sainsbury's by Judith Portrait, the trustee of Lord Sainsbury of Turville's shares, a private equity consortium said they were considering making an offer to buy Sainsbury's.

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.)

Store formats

Sainsbury's checkouts

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.

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.

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.

As of early 2007 Sainsbury's will begin refurbishing some of its "@" stores, turning them into Sainsbury's Local stores. If this pilot scheme works well it is believed that it will be rolled out across all of the Sainsbury's '@' stores.

Product ranges

Sainsbury's differentiate themselves from the other major supermarket groups as "the only supermarket focused on food". 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 branded "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 and/or fat content.
• Free From: around 150 product lines. 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 treated with fertiliser or pesticides.

Werbung

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.

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."
• "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.
• "Making Life Taste Better" — Axed in May 2005. Replaced on carrier bags, till receipts etc in September 2005 by "Try something new today".

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.

Sainsbury's Bank is advertised by singing receipt called Little Bill.

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%."

As of January 2007, the reportable interests of the Sainsbury family represent some 13.9% of J Sainsbury's share capital. All the shares above are held by family lawyer and trustee Miss Judith Portrait. [1] This follows Lord Sainsbury of Preston Candover's decision to split his 3.89% holding in Sainsbury's between other members of his family. [2]

The statement by Lord (John) Sainsbury in December 2006 suggests that the family may not have sold as many shares as previously thought. The other theory could be that the most senior members of the family, with previous stakes of over 3% (the reportable stock exchange shareholding threshold), could have simply transferred some of their shares to their children (who previously held few shares), rather than having sold shares onto the open market.

However, some shares which have been sold were definitely sold to the open market (according to Miss Judith Portrait).

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 have been a significant factor regarding the family's decision to reduce their shareholdings.

• John James Sainsbury (married Mary Anne Staples)
  • Paul James Sainsbury
    • John Barry Sainsbury
      • Sebastian Sainsbury Great grandson of supermarket founder but did not inherit shares or work for company
  • John Benjamin Sainsbury
    • 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.
      • 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.
        • Jason Kanabus (1976-2006), son of Annabel Sainsbury, left fortune to Prince's Trust to help young people.

Cultural references

• The music video of the title track to ABC's third album, How to Be a...Zillionaire!, takes place at an animated caricature of Sainsbury's.
• in the original sketch material recorded for Monty Python's 30th anniversary special Life of Python, John Cleese's character is revealed to the viewer by Michael Palin's character—Luigi Vercotti—as having done adverts for Sainsbury's.

External links

• Sainsbury's consumer website
• J Sainsbury plc corporate website
• Sainsburys online delivery website