Sainsbury's
J Sainsbury plc, trading as Sainsbury's, is a British supermarket and the second-largest chain of supermarkets in the United Kingdom.
Founded in 1869 by John James Sainsbury with a shop on Drury Lane in London, the company was the largest UK retailer of groceries for most of the 20th century. In 1995, Tesco became the market leader when it overtook Sainsbury's, which has since been ranked second or third: it was overtaken by Asda from 2003 to 2014, and again for one month in 2019. In 2018, a planned merger with Asda was blocked by the Competition and Markets Authority over concerns of increased prices for consumers.
The holding company, J Sainsbury plc, is split into three divisions: Sainsbury's Supermarkets Ltd, Sainsbury's Bank, and Argos. The group also owns and operates the Habitat furniture retailer, Nectar card, Tu clothing brand and Bush electronics brand. As of 2021, the largest overall shareholder is the sovereign wealth fund of Qatar, the Qatar Investment Authority, which holds around 15% of the company. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.
History
Origin and growth (1869–1955)
Sainsbury's was established as a partnership in 1869, when John James Sainsbury and his wife Mary Ann opened a shop at 173 Drury Lane in Covent Garden, London. Sainsbury started as a retailer of fresh foods and later expanded into packaged groceries such as tea and sugar. His trading philosophy, as stated on a sign outside his first shop was: "Quality perfect, prices lower".Shops started to look similar, so a high cast-iron 'J. SAINSBURY' sign featured on every London shop so that it could be recognised from a distance, and round-the-back deliveries started to add extra convenience and not upset rivals due to Sainsbury's popularity.
In 1922, J Sainsbury was incorporated as the private company 'J. Sainsbury Limited'.
Groceries were introduced in 1903, when John James purchased a grocer's branch at 12 Kingsland High Street, Dalston. Every shop offered home delivery, as there were fewer cars in those days. Sites were carefully chosen, with a central position in a parade selected in preference to a corner shop. This allowed a larger display of products, which could be kept cooler in summer, which was important as there was no refrigeration.
By the time John James Sainsbury died in 1928, there were more than 128 shops. He was replaced by his eldest son, John Benjamin Sainsbury, who had gone into partnership with his father in 1915.
During the 1930s and 1940s, the company continued to refine its product offerings and maintain its leadership in terms of shop design, convenience, and cleanliness. The company acquired the Midlands-based Thoroughgood chain in 1936.
The founder's grandsons Alan Sainsbury and Sir Robert Sainsbury became joint managing directors in 1938, after their father, John Benjamin Sainsbury, had a minor heart attack.
In the Second World War, many of the men who worked for Sainsbury's were called to perform National Service and were replaced by women. The war was a difficult time for Sainsbury's, as most of its shops were trading in the London area and were bombed or damaged. Turnover fell to half the prewar level. Food was rationed, and one particular shop in East Grinstead was so badly damaged on Friday 9 July 1943 that it had to move to the local church, temporarily, while a new one was built. This shop was not completed until 1951.
Self-service and heyday (1956–1991)
In 1956, Alan Sainsbury became chairman after the death of his father, John Benjamin Sainsbury. During the 1950s and 1960s, Sainsbury's was a keen early adopter of self-service supermarkets in the United Kingdom. On a trip to the United States, Alan Sainsbury realised the benefits of self-service shops and believed the future of Sainsbury's was self-service supermarkets of, with eventually the added bonus of a car park for extra convenience. The first self-service branch opened in Croydon in 1950.Sainsbury's was a pioneer in the development of own-brand goods; the aim was to offer products that matched the quality of nationally branded goods but at a lower price. It expanded more cautiously than Tesco, shunning acquisitions, and it never offered trading stamps.
Until the company went public on 12 July 1973, as J Sainsbury plc, the company was wholly owned by the Sainsbury family. It 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. A million shares were set aside for staff, which led to many staff members buying shares that shot up in value. Within one minute the list of applications was closed: £495 million had been offered for £14.5 million available shares. The Sainsbury family at the time retained 85% of the firm's shares.
Most of the senior positions were held by family members. John Davan Sainsbury, a member of the fourth generation of the founding family, took over the chairmanship from his uncle Sir Robert Sainsbury in 1969, who had been chairman for two years from 1967 following Alan Sainsbury's retirement.
Sainsbury's started to replace its High Street shops with self-service supermarkets above, which were either in out of town locations or in regenerated town centres. Sainsbury's policy was to invest in uniform, well designed shops with a strong emphasis on quality; its slogan was "good food costs less at Sainsbury's". During the 1970s, the average size of Sainsbury's shops rose from to around ; the first edge of town shop, with of selling space, was opened at Coldhams Lane in Cambridge in 1974. The last counter service branch closed in Peckham in 1982. To participate in the hypermarket sector, Sainsbury's formed a joint venture, known as SavaCentre, with British Home Stores. The first SavaCentre shop was opened in Washington, Tyne and Wear, in 1977; nearly half the space, amounting to some, was devoted to textiles, electrical goods and hardware. As the hypermarket format became more mainstream, with rivals such as Asda and Tesco launching ever larger shops, it was decided that a separate brand was no longer needed, and the shops were converted to the regular Sainsbury's superstore format in September 1999.
Sainsbury's diversified further in 1979, forming a joint venture with the Belgian retailer, GB-Inno-BM, to set up a chain of do-it-yourself shops under the Homebase name. Sainsbury's also trebled the size of its Homebase do it yourself business during 1996, by merging its business with Texas Homecare, which it acquired in January 1995 from Ladbroke for £290 million. Sainsbury's sold the Homebase chain in December 2000, in a twofold deal worth £969 million. Sales of the stores to Schroder Ventures generated £750 million and sale of 28 development sites, which had been earmarked for future Homebase shops, were sold for £219 million to rival B&Q's parent company, Kingfisher plc. During the 1980s, the company invested in new technology: the proportion of sales passing through EPOS scanning checkouts rose from 1% to 90%.
In November 1983, Sainsbury's purchased 21% of Shaw's Supermarkets, the second largest retailer of groceries in the northeastern United States. In June 1987, Sainsbury's acquired the rest of the company.
In 1985, the chairman reported that over the preceding 10 years profits had grown from £15 million to more than £168 million, a compound annual rise of 30.4% – after allowing for inflation a real annual growth rate of 17.6%. In 1991, the Sainsbury's group boasted a twelve-year record of dividend increases, of 20% or more and earnings per share had risen by as much for nearly as long. Also in 1991, the company raised £489 million, in new equity to fund the expansion of superstores.
With the advent of out of town shopping complexes during the 1980s, Sainsbury's was one of the many big retail names to open new shops in such complexes – notably with its shop at the Meadowhall Shopping Centre, Sheffield in 1990, and the Merry Hill Shopping Centre at Brierley Hill in the West Midlands, which opened in September 1989.
Sainsbury's expanded into Scotland in 1992 with a shop in Darnley. 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 shops. Two others at Sprucefield, Lisburn, and Holywood Exchange, Belfast would not open until 2003, due to protracted legal challenges. While Sainsbury's outlets in Northern Ireland were all new developments, Tesco instead purchased existing chains from Associated British Foods.
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 ; 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 for quality or for value, "the sometimes brutal treatment of suppliers" which led to suppliers favouring Tesco over Sainsbury's, and an unsuccessful advertising campaign fronted by John Cleese.
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 superstores 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. 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 this position 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 grocery retailer in the UK to offer a home delivery service.
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 and the other responsible for Homebase, and the United States. 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.