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Sainsbury plc and the UK food retail industry

Founded in 1869 by John James and Mary Ann Sainsbury, J Sainsbury plc has become one of the largest food retailers in the UK. Its origins date back to one of the poorest regions in London and it gained its reputation for selling high quality products at low prices. It was as far back as 1882 when its strategy of high quality products at premium prices in more affluent areas began to develop. Facing serious competition from larger chains, the founder expanded threefold between 1890-1900 so that he could benefit from purchasing economies of scale and compete with contemporary rivals such as Liptons. From then on the company, still under family control grew from strength to strength. By the 1970s it had reached the scale of operation that merited public status and as such was the biggest ever flotation on the stock market in 1973. Family descendant John Sainsbury was Chairman during this period – he remained in control from1969 until 1992. During his stewardship the company pursued a strategy of growth through market development into new geographic areas and new store development in the shape of large out of town outlets, beginning with Telford and Cambridge. It also expanded into the north of England and Northern Ireland. These new formats allowed for a much larger product range and spurred on new product development and innovation for example, Sainsbury was the first in the market with own branded wines. In a ten year period to 1994, its product choice had more than doubled and included product ranges to suit changing consumer tastes such as exotic fruits, reduced fat products etc. Its strategy of innovation also utilised the development of technology through computerised stock control, in store scanning and sales ordering, all of which enabled the company to gain a competitive advantage and become the number one food retailer in the UK. Table 1 below provides a summary of Sainsbury’s current store portfolio in the supermarket sector to date.