Sainsbury's

**Sainsbury's** is the second largest chain of supermarkets in the United Kingdom, with a 16.9% share of the supermarket sector. Founded in 1869, by John James Sainsbury with a shop in Drury Lane, London, the company became the largest retailer of groceries in 1922, was an early adopter of self-service retailing in the United Kingdom, and had its heyday during the 1980s. In 1995, Tesco overtook Sainsbury's to become the market leader, and Asda became the second largest in 2003, demoting Sainsbury's to third place for most of the subsequent period until January 2014, when Sainsbury's regained second place.

The holding company, **J Sainsbury plc**, is split into four divisions: **Sainsbury's Supermarkets** (retail; including convenience shops), **Sainsbury's Bank** (banking), **Sainsbury's Argos** (multi-channel retail), and **Telewest Group** (broadcasting, content and television production/distribution). The group's head office is in Sainsbury's Support Centre in Holborn Circus, City of London. The group also has interests in property.

As of February 2018, the largest overall shareholder is the sovereign wealth fund of Qatar, the Qatar Investment Authority, which holds 21.99% of the company. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

## History

### Sainsbury's decline (1992–1998)

In 1992, the long time CEO John Davan Sainsbury retired, and was succeeded as chairman and chief executive by his cousin, David Sainsbury (later Lord Sainsbury of Turville); this brought about a change in management style – David was more consensual and less hierarchical but not in strategy or in corporate beliefs about the company's place in the market.

Mistakes by David Sainsbury and his successors, Dino Adriano and Peter Davis, included the rejection of loyalty cards, the reluctance to move into non-food retailing, the indecision between whether to go quality or for value, "the sometimes brutal treatment of suppliers" which led to suppliers favouring Tesco over Sainsbury's and the unsuccessful John Cleese advertising campaign.

At the end of 1993, it announced price cuts on three hundred of its most popular own label lines. Significantly, this came three months after Tesco had launched its line *Tesco Value*. A few months later, Sainsbury's announced that margins had fallen, that the pace of new supershops construction would slow down, and that it would write down the value of some of its properties.

In 1994, Sainsbury's announced a new town centre format, Sainsbury's Central, again a response to Tesco's Metro, which was already established in five locations. Also in 1994, Sainsbury's lost the takeover battle for William Low (like Tesco, Sainsbury's had long been under-represented in Scotland). Also that year, David Sainsbury dismissed Tesco's clubcard initiative as 'an electronic version of Green Shield Stamps'; the company was soon forced to backtrack, introducing its own Reward Card eighteen months later.

For much of the 20th century, Sainsbury's had been the market leader in the supermarket sector in the United Kingdom, but in 1995, it lost its place as the country's largest retailer of groceries to Tesco. Some new ventures were successful, notably the launch of a retail bank, Sainsbury's Bank, in partnership with Bank of Scotland.

In addition to Shaw's, Sainsbury's bought a minority stake in another supermarket group, Giant Food, based in Washington, DC, although this shareholding was subsequently sold when Ahold of the Netherlands made a full bid for the company.

An arrangement in late 1995 with Supermarket Direct made Sainsbury's the first major groceries retailer in the UK to offer a home delivery service.

Sainsbury's also trebled the size of its Homebase do it yourself business during 1996, by merging its business with Texas Homecare, which in January 1995, it acquired from Ladbroke for £290 million.

In May 1996, the company reported its first fall in profits for 22 years. David Sainsbury announced management changes, involving the appointment of two chief executives, one in charge of supermarkets within the United Kingdom (Dino Adriano) and the other responsible for Homebase, and the United States (David Bremner).

Finally, in 1998, David Sainsbury himself resigned from the company to pursue a career in politics. He was succeeded as non executive chairman by George Bull, who had been chairman of Diageo, and Adriano was promoted to be Group Chief Executive.

### The brand re-launch (1998–2003)

In June 1998, Sainsbury's unveiled its new corporate identity, which was developed by M&C Saatchi, which consisted of the current company logo, new corporate colours of "living orange" and blue, Interstate as the company's new general use lowercase font from the old all uppercase font, the new slogan "Making life taste better", which replaced its old slogan from the 1960s and new staff uniforms.

The strapline was dropped in May 2005, and replaced in September of that year by "Try something new today." This new brand statement was created by Abbott Mead Vickers BBDO. While the Interstate font was used almost exclusively for many years, the company 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 one hundred shops and 2,000 employees. However, poor profitability led to the sale of this share in April 2001. On 8 October 1999, the CEO Dino Adriano lost control of the core supermarket business within the United Kingdom, instead assuming responsibility for the rest of the group. David Bremner became head of the supermarkets in the United Kingdom. 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.

Between 2000–2004, Sir Peter Davis was chief executive of Sainsbury's. Davis' appointment was well received by investors and analysts.

In his first two years, he exceeded profit targets, although by 2004 the group had suffered a decline in performance relative to its competitors and was demoted to third in the groceries market within the United Kingdom. Davis also oversaw an almost £3 ;billion upgrade of shops, distribution and IT equipment, entitled 'Business Transformation Programme', 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 twelve other buildings around Southwark. However the accounting department remained separate at Streatham. 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 September 2002, in conjunction with Debenhams, Barclaycard and BP; Debenhams and Barclaycard have subsequently both left the scheme. The Nectar scheme replaced the Sainsbury's Reward Card; accrued points were transferred over.

In January 2003, Wm Morrison Supermarkets (trading as Morrisons) 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 Morrison's, would "operate against the public interest". As part of the approval Morrison's was to dispose of fifty three of the combined group's shops.

In May 2004, Sainsbury's announced that it would acquire fourteen of these shops, thirteen Safeway shops and one Morrison's outlet, located primarily in the Midlands and the North of England.

### 'Making Sainsbury's Great Again' (2004–2006)

At the end of March 2004, Davis was promoted to chairman and was replaced as CEO by Justin King. King joined Sainsbury's in 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. Schooled in Solihull, near Birmingham and a graduate of the University of Bath, where he took a business administration degree, King was also previously a managing director at Asda with responsibility for hypermarkets.

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 £2 million, despite poor company performance. On 19 July 2004, Davis' replacement, Philip Hampton, was appointed as chairman.

King ordered a direct mail campaign to one million Sainsbury's customers as part of his six-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 – in a three-year recovery plan entitled 'Making Sainsbury's Great Again'.

This was generally well received by both the stock market and the media. Immediate plans included laying off over 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. The aim would be to increase sales revenue by £2.5 billion by the financial year ending March 2008. 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 he was an expert in logistics at Safeway, but left following its takeover by Morrisons. Immediate supply chain improvements included the reactivation of two distribution centres. At the time of the business review on 19 October 2004, referring to the availability problems, Justin King said "Lawrence hadn't seen anything that he hadn't seen before. He just hadn't seen them all in the same place at the same time".

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. In addition, it did a deal with IBM to upgrade its Electronic – Point of Sale systems as a result of increased sales.

Sainsbury's sold its subsidiary in America, Shaw's, to Albertsons in March 2004. Also in 2004 Sainsbury's expanded its share of the convenience shop market through acquisitions. Bell's Stores, a chain of fifty-four shops based in North East England, was acquired in February 2004. Jacksons Stores, a chain of one hundred and fourteen shop based in Yorkshire and the North Midlands, was purchased in August 2004. JB Beaumont, a chain of six shops in the East Midlands, was acquired in November 2004. SL Shaw Ltd, which owned six shops, was acquired on 28 April 2005 for £6 million.

Since the launch of King's recovery programme, the company has reported nineteen consecutive quarters of sales growth, most recently in October 2009. 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.

### Takeover bids (2007)

On 2 February 2007, after months of speculation about a private equity bid, CVC Capital Partners, Kohlberg Kravis Roberts (KKR) and Blackstone Group announced that they were considering a bid for Sainsbury's. The consortium grew to include Goldman Sachs and Texas Pacific Group. On 6 March 2007, with a formal bid yet to be tabled, the Takeover Panel issued a bid deadline of 13 April.

On 4 April, KKR left the consortium to focus on its bid for Alliance Boots. On 5 April, the consortium submitted an "indicative offer" of 562p a share to the company's board. After discussions between Sir Philip Hampton and the two largest Sainsbury family shareholders Lord Sainsbury of Turville and Lord Sainsbury of Preston Candover the offer was rejected. On 9 April, the indicative offer was raised to 582p a share, however this too was rejected. This meant the consortium could not satisfy its own preconditions for a bid, most importantly 75% shareholder support; the combined Sainsbury family holding at the time was 18%.

Lord Sainsbury of Turville, who then held 7.75% of Sainsbury's, stated that he could see no reason why the Sainsbury's board would even consider opening its books for due diligence for anything less than 600p per share. Lord Sainsbury of Preston Candover, with just under 3%, was more extreme than his cousin, and refused to sell at any price.

He believed any offer at that stage of Sainsbury's recovery was likely to undervalue the business, and with private equity seeking high returns on their investments, saw no reason to sell, given that the current management, led by Justin King, could deliver the extra profit generated for the benefit of existing investors.

He claimed the bid 'brought nothing to the business', and that high levels of debt would significantly weaken the company and its competitive position in the long term, which would have an adverse effect on Sainsbury's stakeholders. On 11 April, the CVC led consortium abandoned its offer, stating "it became clear the consortium would be unable to make a proposal that would result in a successful offer."

In May 2007, Sainsbury's identified five areas of growth: Growth of non-food ranges; opening of new convenience shops and growth of online home delivery and banking operations; Expansion of supermarket space through new shops and development of the company's "largely underdeveloped shop portfolio"; and "active property management".

On 25 April 2007, Delta Two, a Qatari investment company, bought a 14% stake in Sainsbury's causing its share price to rise 7.17%, and then increased its holding to 17.6%. Their interest in Sainsbury's is thought to centre on its property portfolio. They increased their stake to 25% in June 2007. On 18 July 2007, BBC News reported that Delta Two had tabled a conditional bid proposal. Paul Taylor, the principal of Delta Two, flew David and John Sainsbury to Sardinia to reveal and discuss the potential bid which amounted to 600p per share.

The family had reservations about the price of the bid. They were also concerned about the proposed structure, which involved splitting the business into an operating company and a highly leveraged property company. They were additionally concerned about adequacy of funding, both for the bid and for the company's pension scheme. On 5 November 2007, it was announced Delta Two had abandoned its takeover bid due to the "deterioration of credit markets" and concerns about funding the company's pension scheme.

### Administrative changes

On 4 October 2007, Sainsbury's announced plans to relocate its Shop 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 its supermarkets in Northern Ireland to eleven, with the purchase of two Curley's Supermarkets in Dungannon and Belfast, which includes those shops' petrol stations and off licences.

In November 2007, Sainsbury's centralised its HR department, relocating to the seventeenth and eighteenth floors of the Manchester Arndale Centre to form a Shared Service Centre, which was initially trialled 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 its Colleague Administration Department and Occupational Health enquiries in a dedicated unit.
Since April 2012, the centre has begun a gradual relocation to its new offices in the centre of Lincoln, along with a rebrand and partial relaunch as Sainsbury's HR Services.

Further re organisation has seen central finance operations move from the *Holborn Head Office* to Manchester, and property division move to Ansty Park in Coventry. Most of the remaining Holborn operations are likely to move to Coventry in due course, as Sainsbury's looks to reduce costs by moving out of Central London.

### Developing the business (2009–2016)

In March 2009, Sainsbury's reached an agreement to buy 24 shops from The Co-operative Group, 22 of which were Somerfield shops, which the group were required to sell as a condition of their takeover of Somerfield. A further nine shops were purchased from The Co-operative Group in June 2009. These were concentrated in West Wales, the North of England and Scotland, where Sainsbury's market share is low.

In May 2010, Sainsbury's confirmed a multimillion-pound deal with the London Organising Committee of the Olympic and Paralympic Games (LOCOG) to be the main sponsor of the 2012 Paralympic Games. Under the deal, Sainsbury’s sold Paralympic merchandise and became involved in high-profile events, such as the torch relay. It became one of only two sponsors able to take advantage of the limited branding allowed within the Games. The promotional rights did not extend to the Olympics. After the Paralympic Games, the company decided to sponsor the British Paralympic Association through to Rio 2016.

On 30 November 2011, Sainsbury's reached the first milestone in its *Vision for 2020*, by opening its thousandth self-service shop in Irvine, Scotland. To celebrate this, Sainsbury's doubled its staff discount to 20% for the first four days of December. In January 2014, Sainsbury's completed the purchase of the 50% share in Sainsbury's Bank, owned by Lloyds Banking Group.

In July 2014, the company began powering one of its shops by converting food waste into bio methane gas to generate electricity. The group became the first retailer to come off the National Grid by its own means. In July 2016, Arcus FM extended its facilities management contract with Sainsbury’s, securing a ten-year renewal. Arcus won the initial contract in 2009, and saw the contract extended in 2011.

### Argos acquisition and multi-channel retailing (2016-2017)

After a four-month pursuit, in April 2016 Home Retail Group agreed to be taken over by Sainsbury's for £1.4bn, Sainsbury's completed the acquisition in September 2016. The deal included catalogue chain Argos and furnishing retailer Habitat, which made Sainsbury's the largest retailer of merchandise in the UK.

Once the deal was complete the J Sainsbury's group was split into its three new divisions of Sainsbury's, Sainsbury's Bank and Sainsbury's Argos (including Habitat). Throughout 2016 and 2017 Sainsbury's pursued expansion of its multi-channel strategy, increasing the number of groceries Click and Collect points and online fulfilment locations to serve its online delivery network including opening a dark store in Bromley by Bow to serve the London area, increasing geographical coverage of its same-day groceries delivery network and integrating concessions into its shops such as Argos, Habitat, Timpson's and Starbuck's.

In November 2016 Sainsbury's announced its intentions to cut £500 million of costs from its business. In March 2017 400 jobs were cut and 4000 jobs were re-organized, mainly affecting employees in nightshift and commercial operation (cash office and price control) roles.

### Expansion into broadcasting and restructuring (2017-present)

On 2 December 2016, in an effort to increase its media holdings, Sainsbury's announced a deal to buy UK broadcaster Telewest Group for £1.8 billion, following a bidding war with a variety of other suitors including BT, Lionsgate, and Vivendi.

On 19 June 2017, following approval by EU regulators and and Telewest shareholders, the deal was completed, thus making Telewest a subsidiary of Sainsbury's, and effectively being renamed Sainsbury's Telewest as a result, though Telewest Group remained the trading name of the company.

In August 2017 1000 jobs were cut throughout all of its Head Office and support centres, affecting a variety of functions.
In October 2017 changes to security contracts meant that provider Mitie reduced the number of security officers within shops. In the same month Sainsbury's announced plans to axe all shop based Human Resource employees including HR managers, payroll clerks, administration clerks and Learning and Development managers, overall affecting 1400 jobs. Additionally another 600 jobs at its Head Offices were cut.

In January 2018 Sainsbury's announced proposals to overhaul shop management structures which would result in job losses 'in the thousands'.

On 1 February 2018 announced the purchase of Nectar from Aimia. The deal costing £60 million gives full control of all data stored by the loyalty scheme to Sainsbury’s Argos. Sainsbury’s was one of the co-founders of the scheme and was the most prominent participant of the scheme. Aimia employees working on Nectar will become Sainsbury’s employees but the team will remain a separate structure away from Sainsbury’s.

In March 2018 Sainsbury's announced that it would be increasing the base rate of pay for its staff to retain the best workers. It said it would increase pay by 15% in the year, spending an extra £100 million on a plan that will also simplify the number of job roles.

## Shops

In May 2018 Sainsbury's shop portfolio was as follows.

 Convenience shops
 Total

According to CACI, as of 2006, Sainsbury's has market dominance in 8 postcode areas; TQ (Torquay), SN (Swindon), GU (Guildford), RH (Redhill), DA (Dartford), SE (South East London), EN (Enfield) and WV (Wolverhampton).

It is particularly strong in London and the South-East, where it is based, and has powerful positions within many UK cities. The company acquired the Midlands-based Thoroughgood in the 1930s. Expansion since 1945 has given the company national reach, although the chain is not as well-represented in Scotland as Tesco, and Morrisons (as Safeway dominated Scotland before being taken over by them). This is partly due to Sainsbury's having lost out to Tesco in the bidding war for William Low in the 1990s.

### Supermarkets

On 29 September 2010, Sainsbury's opened one of its largest UK shops, an extension of its existing shop in Crayford, South East London, which now has over100,000 sq ft (9,300 m2)  of retail space and is its largest supermarket to be built in the UK. Bybrook in Ashford Kent, which reopened on 16 November 2011 has over 100,000 sq ft (9,300 m2).

The refurbished Lincoln, Lincolnshire shop opened on 24 November 2010 making it the UK's second largest Sainsbury's supermarket after Crayford at 98,712 sq ft (9,170.6 m2).

Shops in the 'supermarket' category all have similar layouts and operations but may vary in their offering to the customer. Most will have a convenience kiosk, produce, meat, fish, groceries and frozen food, and manned and self-service checkouts. However depending on the size of the shop they may also have an in-shop bakery, butcher, fishmonger, delicatessen and pizza counters, a cafe, TU clothing, general merchandise, petrol station and online picking department. Some shops also feature concessions such as a beauty hall, travel agents, Jessops, Patisserie Valerie, Specsavers, Carte D'or and Ben and Jerrys ice cream stands, Zizzi pizza counters, Sushi Gourmet counters, juice bars, The Fragrance Shop, Argos and Habitat. Others also feature a "Centre for Dentistry" where dental treatments are offered and/or an "Explore Learning" centre where children are offered extra English and maths tuition. Some shops also feature a Starbucks Coffee instead of an in-shop cafe.

#### Sainsbury's Fuel

Sainsbury's operates a chain of fuel forecourts located at some of its supermarkets selling diesel, petrol and City Diesel. The chain first opened a forecourt in 1974 at its Croydon SavaCentre hypermarket, the forecourts were initially supplied by and marketed as Jet stations. However, from 1980 onwards Sainsbury's operated its own forecourts and sourced its own fuel. In 2004 BP became the supplier of fuel and operated its forecourts at supermarkets where possible. This deal ended in 2009 and operation of all forecourts and fuel sourcing returned to the control of Sainsbury's.

#### Sainsbury's Café

A number of stores operate self-service cafes, marketed as Sainsbury's Café, of which most are open for almost as long as the shops are open.

### Sainsbury's Local

*Main article: Sainsbury's Local*

As well as developing its own sites, Sainsbury's expanded its convenience portfolio through acquisitions of Bell's Stores, Jackson's Stores, JB Beaumont and SL Shaw Ltd. Sainsbury's initially retained the strong Bells, Jacksons and Beaumont branding. For example, refurbished shops were called *Sainsbury's at Bells*. These were effectively Sainsbury's Local shops with a revised fascia, retaining some features of the former local chain. Unrefurbished shops retained the original brand and logo, but still offered Sainsbury's own brand products, pricing and some point of sale, without accepting Nectar cards. The old websites were also retained with some Sainsbury's branding. However all of these acquired shops were fully converted to the Local fascia from 4 May 2007.

In July 2013, chief executive Justin King announced plans to focus on expanding its convenience shops to surpass the number of its supermarket properties by 2014.

## Product ranges

A large shop typically stocks around 30,000 lines of which around 20% are "own-label" goods. These own-brand lines include:

Equivalent to Tesco's *Everyday Value*, Asda's *Smart Price* and Morrisons' *M Savers*.
 *Taste The Difference* | Premium-quality brand containing around 1100 food lines, including many processed foods such as ready-made meals and premium bakery lines. The range consisting of 1141 lines was re-launched in September 2010 when 75% of the range was improved or newly added.
 *On The Go* | A new range of sandwiches, salads and snacks launched in September 2016, this new range replaced all of the existing sandwiches and replaced with improved and new fillings. Burritos, Pasta Pots and Sushi are included in the range as well as a selection of snacks.

### Former ranges

 *Economy* | The predecessor to Sainsbury's Basics. Economy was succeeded by Low Price in c. 2001 and then was ultimately succeeded by Basics.

## See also

* List of supermarket chains in the United Kingdom

## External links

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