British Retailer Sainsbury's: On the Road to Recovery
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Case Code: BSTR302 Case Length: 20 Pages Period: 2007-2008 Pub Date: 2009 Teaching Note: Available |
Price: Rs.400 Organization: News Corporation, Dow Jones Industry: Media & Newspaper Publishing Countries: Global; USA Themes: Growth Strategy, Merger & Acquisitions, Corporate Valuation |
Abstract Case Intro 1 Case Intro 2 Excerpts
"People said Sainsbury's was a busted flush. There was a sense the industry had moved on and left Sainsbury's behind and that its lot was to be a laggard. What sticks out in my mind was one comment that: 'They won't do it (recover from the downfall), but if they do they will have done a bloody good job.' We are very pleased to be here three years down the line, saying we did not just do it, but we did a bit better."
- Justin King, CEO, J Sainsbury plc, in 2008.
"It's difficult not to conclude that Sainsbury's truly is becoming great again, and that King has been key to the business' transformation."
- Marketing in May 2008.
Introduction
In May 2008, Justin King (King), CEO of UK-based J Sainsbury plc., which owned Sainsbury's Supermarket Ltd (Sainsbury's), one of the largest retailers in the UK, topped Marketing's annual list of 100 most powerful people, earning the distinction of being the country's most powerful marketer. "Having beaten his own growth targets, set three years ago, and pocketed a £7m bonus in the process, King has achieved what many thought was unachievable...
By successfully striking a balance between making the supermarket appeal to consumers through its promotion of quality, price, and ethical provenance - its entire own-brand banana, sugar, and tea offering has been converted to fairtrade - and producing sales figures that have impressed the City, King has more than proved that his strategy was right," the magazine said (Refer to Exhibit I for Top 15 Marketers in 'The Marketing's Power 100 - 2008').
Analysts felt that King was instrumental in turning around the fortunes of Sainsbury's and reversing the decline that the company had suffered in the UK retail market between 1995 and 2008.
Sainsbury's, which was started in 1869, was the leading retailer in the UK till the early 1990s.
In 1995, Tesco plc (Tesco) overtook it to become the leading retailer of the country. Analysts were of the view that Sainsbury's ignored the growing clout of Tesco as its sales were growing.
In early 2000, Sir Peter Davis (Davis) was brought in as the CEO to help the company recover market share. He invested heavily in several initiatives to revive the company's share, but these did not prove successful. Sales started to decline slowly after 2002 and in 2003, Sainsbury's was pushed to the third position by the Asda Group plc (Asda)...
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