Supply Chain Restructuring at Sainsbury' Supermarkets Limited

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Case Details:

Case Code : OPER094
Case Length : 18 Pages
Period : 2000-09
Organization : Sainsbury's Supermarkets Limited
Pub Date : 2010
Teaching Note :Not Available
Countries : UK
Industry : Retail

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Customers couldn't find what they wanted on our shelves. The goods were in the storerooms but they weren't getting onto the shelves, which resulted in a loss of retailing strength."¹

- Nigel Hough, Sainsbury's Supply Chain Communications Manager, in 2007.

Introduction

In November 2009, Sainsbury's Supermarkets Limited (Sainsbury's), the UK-based leading supermarket chain, reported that its sales for the 28 weeks ending October 03, 2009, had grown by 3.7% as compared to the corresponding period of the previous year.

The sales grew from £ 10756 million to £ 11158 million. This was the fifth consecutive year that Sainsbury's was reporting like-for-like sales growth during the first half of the fiscal year (Refer to Exhibit I for Sainsbury's income statement for the first half of 2009-10).

Sainsbury's, founded in 1869, was the leading retailer in the UK till the early 1990s.

However, in 1995, Tesco Plc. (Tesco)2 overtook it with a market share of 13.4%. Sainsbury's with a 12.2% market share was pushed to the second position.

By the year 2000, Sainsbury's market share had dropped to 11.5%, while Tesco's share had grown to 16.2%. In order to improve its market position, Sainsbury's brought in a new CEO, Peter Davis (Davis).

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1] "Large-Scale Logistics," Logistics Magazine, No.1, 2007.
2] Tesco is the largest retailer in terms of sales and market share in the UK. As of 2009, it was the third largest in the world. It was founded in 1919 by Jack Cohen in London as small grocery stall. It housed a wide range of products. For the financial year ending February 23, 2009, Tesco reported revenues of £ 59.4 billion and an operating income of £ 3.128 billion.


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