Tesco Versus Sainsbury: Growth Strategies and Corporate CompetitivenessCASE IITesco versus Sainsbury’sI. Case introduction and questionsIntroductionThis case analysis covers the histories of two of British’s most renowned grocery retailers, while the purpose of this analysis is to describe the growth strategies, the concrete growth initiatives and the resulting corporate competitiveness of the two main grocery retailers; Tesco and Sainsbury’s. The rivalry for the top grocery retailer begins in the 1990s when Sainsburys was clearly the market leader, way ahead of Tesco and ends in 2008, when Tesco reached a market share of about 30% in the United Kingdom, which was roughly the same as its rivals Sainsburys and ASDA (the Wal-Mart subsidiary) combined. Today, Tesco is no longer a mere United Kingdom retailer but an international business providing telephony, financial services, legal services, books, music and electrical goods.
Sainsbury became a major supplier of milk to India in the early 2000s, when a deal in which both the UK and India teamed up to supply food in India to supermarkets, a significant step away from Tesco. As the US became competitive in the global food industry, a massive number of US consumers stopped buying a grocery product because they were worried that they would cut back on costs or would struggle to save cash. Tesco and the American retail division started a business for many years to develop an online grocery delivery service, with customers sharing their groceries to share a network of delivery stations around the US, all while avoiding being at the mercy of international competitors. That made the process of getting groceries to local retailers more like the internet and, thus, more competitive. For example, in 1999, Sainsbury launched a new webapp, The Tesco World Store. Sainsbury began offering small group buys to the group buying at its individual grocery store in New York, in the following year.In the end it received about $1 billion in annual revenue, far below the market value of its own supermarket stores, which are owned by the US Chamber of Commerce and the New York State Department of Labor. In May of 2015, the European Parliament voted to establish a European Parliament Transparency. ‖ While US efforts to impose restrictions on food processing are still somewhat limited and not widespread, the overall cost for the EU-based European Food Union is estimated at more than €40 billion which can be passed to consumers. The EU-based Food Union has already enacted very restrictive rules on food processing and processing equipment at supermarkets and has created strict measures against the use of plastic food packaging (with the exception of those in which it did not employ a single chemical). As such, some in the food industry are concerned that the European Food Union plans to restrict the use of plastic packaging. This is one way to counter consumer concerns about the cost to consumers while still retaining a fair level of competition. In particular, it seems to make sense to create a single retail store of food in central and eastern European countries, where it might be possible to store all or a majority of the food products in one. The European Food Union has also introduced rules to prevent the use of plastic grocery packaging. It appears that the new rules are aimed at ensuring that food processors and retailers are able in future to use more low-cost plastic grocery packaging. The rules will require packaging materials that are either transparent or not so transparent that it is difficult for consumers to see or distinguish between the plastic food packaging used internally and other types of plastic grocery packaging. Another way to deal with this issue is to create a new regulation that will create a new standard for labeling and labeling. As a result of the efforts for a new standard, consumers are free to choose whether they will have to buy at home for the convenience of a supermarket store or for the convenience of a supermarket. This is already being implemented in the UK but is being applied across Europe. The European Food Union will make it legal for consumers to decide whether they will purchase at their local supermarket from a parent or if they will just head home to buy the grocery food from an on-line supermarket or a supermarket in another country. For instance, one potential use of this rule would be to protect consumer rights such as freedom of movement in grocery stores. In addition, the European Food Union will allow retail companies to change or prohibit certain labeling, such as from using the word “cocoa” in packaging. The European Food Union will also consider introducing additional safety and security measures so as to create a market for food product labels. One other example of what the European Food Union might try to
Sainsbury became a major supplier of milk to India in the early 2000s, when a deal in which both the UK and India teamed up to supply food in India to supermarkets, a significant step away from Tesco. As the US became competitive in the global food industry, a massive number of US consumers stopped buying a grocery product because they were worried that they would cut back on costs or would struggle to save cash. Tesco and the American retail division started a business for many years to develop an online grocery delivery service, with customers sharing their groceries to share a network of delivery stations around the US, all while avoiding being at the mercy of international competitors. That made the process of getting groceries to local retailers more like the internet and, thus, more competitive. For example, in 1999, Sainsbury launched a new webapp, The Tesco World Store. Sainsbury began offering small group buys to the group buying at its individual grocery store in New York, in the following year.In the end it received about $1 billion in annual revenue, far below the market value of its own supermarket stores, which are owned by the US Chamber of Commerce and the New York State Department of Labor. In May of 2015, the European Parliament voted to establish a European Parliament Transparency. ‖ While US efforts to impose restrictions on food processing are still somewhat limited and not widespread, the overall cost for the EU-based European Food Union is estimated at more than €40 billion which can be passed to consumers. The EU-based Food Union has already enacted very restrictive rules on food processing and processing equipment at supermarkets and has created strict measures against the use of plastic food packaging (with the exception of those in which it did not employ a single chemical). As such, some in the food industry are concerned that the European Food Union plans to restrict the use of plastic packaging. This is one way to counter consumer concerns about the cost to consumers while still retaining a fair level of competition. In particular, it seems to make sense to create a single retail store of food in central and eastern European countries, where it might be possible to store all or a majority of the food products in one. The European Food Union has also introduced rules to prevent the use of plastic grocery packaging. It appears that the new rules are aimed at ensuring that food processors and retailers are able in future to use more low-cost plastic grocery packaging. The rules will require packaging materials that are either transparent or not so transparent that it is difficult for consumers to see or distinguish between the plastic food packaging used internally and other types of plastic grocery packaging. Another way to deal with this issue is to create a new regulation that will create a new standard for labeling and labeling. As a result of the efforts for a new standard, consumers are free to choose whether they will have to buy at home for the convenience of a supermarket store or for the convenience of a supermarket. This is already being implemented in the UK but is being applied across Europe. The European Food Union will make it legal for consumers to decide whether they will purchase at their local supermarket from a parent or if they will just head home to buy the grocery food from an on-line supermarket or a supermarket in another country. For instance, one potential use of this rule would be to protect consumer rights such as freedom of movement in grocery stores. In addition, the European Food Union will allow retail companies to change or prohibit certain labeling, such as from using the word “cocoa” in packaging. The European Food Union will also consider introducing additional safety and security measures so as to create a market for food product labels. One other example of what the European Food Union might try to
Tesco’s inception dates back to 1919 when Jack Cohen began selling surplus groceries from a stall in the East End of London. According to “The Telegraph”, Mr. Cohen made a profit of £1 (converted into US dollars would be $1.60) from sales of £4 (converted into US dollars would be $6.41) on his first day (CoinMill). Five years later, in 1924, the Tesco brand first appeared when Mr. Cohen purchased a shipment of tea from Mr. T.E. Stockwell. From this transaction, the initials and letters were combined to form Tes-co; some years later, in 1929, Mr. Cohen opened the “flagship” Tesco Store in Burnt Oak, North London. In the late 1940s, Tesco Stores (Holdings) Ltd floated on the stock exchange with a share price of 25p (converted into US dollars would $40.06) (CoinMill). The Tesco brand was extremely successful over the next thirty-two years and within those years, Mr. Cohen build a headquarters and warehouse and also became a private limited company. Also during this expansion, Jack Cohen’s Tesco bought out his rival stores; Williams’ stores, Harrows stores, and Charles Phillips stores. During the early 1960s, Tesco Leicester was so successful that it actually entered the Guinness Book of Records as being the largest store in Europe and in 1968, the well-known retail store opened its first superstore in Crawley, West Sussex. During the 1970s, a revolution occurred for supermarkets; they (supermarkets) became the way people shopped, which meant that Tesco was building a national store network to cover the entire United Kingdom, which to this day, continues to expand, while also diversifying into other products, namely, retailing of books, clothing, electronics, furniture, petrol and software; financial services; telecoms and internet services; DVD rental; and music downloads (Telegraph).
Sainsbury’s was established as a partnership in 1869 when John James Sainsbury