CASE ANALYSIS : TESCO VS SAINSBURRY
Tesco Vs Sainsburry
PRESENTED BY 1. Rahmat Adil Indrawan 2. Syahrul Yaser 3. Rizka Ainaeny 4. Rinawan Wijaya 5. Restu Pratiwi 6. Yohannes Yohannes W. Sudjana 7. Vitrio Wibisono 8. Widi Irawan 9. Nur Thalia Budi Utami 10. Mushashi Pangeran Batara Sitanggang
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D• In 2009, UK retail sales were over £285billion and are N growing, despite the economic downturn in 2007. During U 2010, the industry created an extra 12,750 full-time jobs, O a 2.1% increase on the previous year. R G• This industry is very much affected by economic K condition, especially by inflation rate and employment. C A B http://www.prospects.ac.uk/industries_retail_overview.htm
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HISTORY
• • • • •
Established 1869 by John James and Mary Ann Sainsbury 1922 J.sainsbury become private company J Sainsbury plc. 1973 Company become the largest floatation on London Stock Exchange 1995 Its surpassed in by Tesco 2003 It was pushed to third place by ASDA
• • • • •
Established 1919 by Jack Cohen 1924 Tesco brand first appear 1973 Jack cohen resigned, Lesli Porter “Pile it high and sell it cheap” 1977 launched “Operation Checkout” 1990 mid-sized food chain far behind its rival
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GENERAL ENVIRONMENT • Supermarket retail is the largest industry in UK. • Economics segment => retail industry affected by customer earnings. • Supermarket industry is market oriented => customer is very important. • Technology => customers more aware on technological innovation (internet base). • Social culture => customer toward one stop and bulk shopping, more aware on healthy product.
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GENERAL ENVIRONMENT •
Economic
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Physical à in 2005 Tesco’s buildings collapsed (city council rules), bbc.co.uk, 2006.
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Sociocultural à customer toward one stop and bulk shopping, more aware on healthy and organic product
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Global
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Technological
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Political à “Need-test” 1996 and deleted in 2007 by government white-paper (thisismoney.co.uk, 2007).
Tesco Vs Sainsburry
à
à
relatively stable.
retail industry is acceptable globally. à
customers awareness on internet.
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COMPETITOR ENVIRONMENT •
1990 beginning UK retail market become more competitive. Three player dominated the food market: Asda, Sainsbury, Tesco.
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Mid 1990 competition intensified as a price war among these player emerged
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Market entry of discounters : Aldi and Lidl
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R O T I T E P M O C F O E P Y T Tesco Vs Sainsburry
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FIVE FORCES Low, own private brand & mas production High because of low switching cost
Supplier Power
•Online Store •Traditional Market
Buyer Power
Internal Rivalry
Substitute
Intense
Threat of New Entrants High because of low entry barrier
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TESCO SWOT Strength 1. Highest market share in UK 2. All market segments 3. Wide demographic market 4. Innovative (club card, online store) 5. First mover
Weakness 1. Abandoned Cohen philosophy “pile it high and sell it cheap” (stagnating bad image in 1977) 2. Too aggressive in expansion
Opportunity 1. Expand non food retail 2. Development of healthy and beauty products 3. International growth market
Threat 1. Restaurant business picking 2. ASDA international expansion 3. Product substitution 4. Intense price war
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SAINSBURRY SWOT Strength 1. Mass & High End Market 2. Strong Brand (Early Established) 3. Store Network 4. Private Brand
Opportunity 1. Expand the number of store 2. Expand product offering
Tesco Vs Sainsburry
Weakness 1. Price 2. Declining Profitability 3. Lack of International Presence 4. Supply Chain Disruption
Threat 1. Intense price war 2. Product Substitution
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•
T A M• R O F E R O T S
“The Tesco Way” focus on people, both employees and customers Tesco store divided into : Tesco
•
“Sainsbury’s SaveCentre”
extra, Tesco superstores, Tesco
Hypermarket format as joint
Metro, Tesco Express and One
venture with British Home stores
Stop
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No separate Brand
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Operate with three formats: Regular Sainsbury’s Store,Sainsbury’s local Store, Sainsbury’s Central Store.
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BUSINESS LEVEL STRATEGY
TESCO • Integrated cost leadership/ differentiation strategy.
SAINSBURY • Differentiation high quality product
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BUSINESS LEVEL STRATEGY/ FACT
• Asda = price leader followed by Tesco. Sainsbury = upper price segment, between mass market and high end. • Tesco service offering: offer upper, medium, lowincome customers in the same store, investing in its own brand. • This wide reaching demographics, reliability and trustworthiness keep shoppers return to Tesco.
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BUSINESS LEVEL STRATEGY/ FACT
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Tesco ditribution strategy: draw goods from suppliers into regional distribution centers for preparation and delivery to stores.
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Sainsbury distribution strat. : heavily invested in fully automated depot (4) ----- failed.
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Tesco Innovation: Club card. To gather consumer information, cater to specific potential customers need and wants.
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Sainsbury is a late follower—showing no immediate response. Introduce multiparty card (Nectar) but its being worst card schemes offered.
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Y G E T A R T S L E V E L E T A R O P R O C
• Tesco and Sainsbury’s do diversification strategy – un related from food to non food (clothing, financial service, & telecommunication). • Tesco has wider global market than
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Sainsbury. 16
Tesco • to be a successful international retailer; • to grow the core UK business; • to be as strong in non-food as in food; • to develop retailing services; and • to put community at the heart of what we do • Customer focus through Clubcard • Employee focus
STRATEGY DEVELOPMENT Tesco Vs Sainsburry
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Sainsbury • Healthy & green product at fair prices • Accelerating the growth of complementary non-food and services • Reaching more customer through additional channels • Growing supermarket spaces • Active property management • Customer focus through questionaires • Financial Policy : Cutting half of dividend • Employee focus
STRATEGY DEVELOPMENT Tesco Vs Sainsburry
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Y G E T A R T S T N U O C S I D Tesco Vs Sainsburry
Cash Discount : Clubcard
Time Discount : Christmas, New year price cut after 6 pm
Local segmented : Different price in different country
Tesco
Quantitative Discount : Buy 2 get 1 free, buy 3 for 2
Promotional allowance : Buy 1 get 1 free
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Y G E T A R T S T N U O C S I D Tesco Vs Sainsburry
Cash Discount : Reward Card
SAINSBURY’S
Quantitative Discount
Promotional allowance : Discount after repositioning its place
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MAIN CAPABILITIES
• Retailing diversified product • Distribution channel • Customer relationship management
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Addi$onalReferences 1. http://www.thisismoney.co.uk/news/article.html? in_article_id=420939&in_page_id=2 2. http://news.bbc.co.uk/2/hi/uk_news/5261844.stm 3. http://www.accountancyage.com/aa/news/1934865/tesco-sainsburysattack-lease-accounting-proposals
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