This is an INDIVIDUAL ASSIGNMENT in which you are required to write a 3,000 word report.
Requirement

Read the following background on the supermarket sector in the UK

n  NB: The background is meant purely as an introduction and provides little in the way of useful information for answering the questions.Â

n  Merely repeating what is in the case study will gain you no marks.Â

Carry out further research into the UK supermarket sector by

n  Reading marketing journals and text books (UK supermarket sector is much-written about!)

n  Using University resources such as Mintel (available through the “Library & IT” tab on the Student Portal – talk to your PPD1 tutor if you are unsure)

n  Looking at trade press (“Marketing”, “Marketing Week”, “Campaign”, Retail Week, The Grocer, Retail focus, Retail Gazette etc)

n  DO NOT carry out primary research – This would be against the University’s ethics policy (more details of this will be in the lectures and tutorials)

n  DO NOT contact the advertisers or their agencies directly – it just annoys them and leads to complaints that I, who will be marking your papers, have to field!

You can also read ahead in the course’s recommended text book or any other text book you feel is appropriate.Â

Questions
Provide a 3,000 word written report to:

1.   Use either PESTEL or Porter’s Five Forces to analyse the business environment in which all UK supermarkets operate

2.   Provide a SWOT analysis for Sainsbury’s supermarkets

n  You should aim to provide about five points under each heading

n  Each point made should be specific to Sainsbury’s

n  An example of a non-specific point would be that Sainsbury’s will ensure they obey UK employment law – this is applicable to all companies in the UK, it is compulsory and is therefore irrelevant and pointless

3.   Identify the key market segments that you feel Sainsbury’s should be targeting in order to continue to reclaim market share

In all cases, your answers should be fully justified by using academic theory.Â

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Sainsbury’s becomes UK’s second-biggest supermarket
Sizeable convenience store estate and stronger growth in its southern heartland helps retailer overtake Asda in terms of market share.

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Sainsbury’s has overtaken Asda to become the UK’s second-biggest supermarket as sales at the Walmart-owned chain continue to fall much faster than any of its major rivals.

Asda’s sales dropped 2.7% in the 12 weeks to 19 July, according to the latest figures from Kantar Worldpanel, taking its market share to 16.4%, 0.6 percentage points lower than a year before. It was the worst performer, not only among the “big four” supermarkets, but also behind smaller rivals Iceland and the Co-op.

Sainsbury’s sales also fell – but by just 0.3% so that its market share dipped by only 0.1 percentage points to 16.5%, putting it just above its rival.

Sainsbury’s has previously pulled ahead of Asda for brief periods over the past few years, but generally that has been at Christmas, when the London-based chain benefits from shoppers seeking out the quality fresh food it is known for. This is the first time since 2003 that Sainsbury’s has pulled ahead outside of Christmas, according to Kantar.

“Asda has had a slow 2015,” said Fraser McKevitt from Kantar Worldpanel. “Asda is being run more for profit rather than market share or revenue. It also hasn’t got a substantial convenience store estate while convenience is acting as a real growth driver for Sainsbury’s.” He added that Asda was also being held back by its lower concentration of stores in the south of England and London, where growth is proving stronger than in the retailer’s northern heartland.

Both Asda and Sainsbury’s remain a long way behind Tesco, with 28.5% market share, a fall of 0.4 percentage points.

Asda said it was no surprise that figures on the industry were “volatile from month to month” as it was “going through one of the toughest trading periods to face UK supermarkets.”

“As a strong and balanced business we remain focused on our long term strategy for building a sustainable business over the coming years. We won’t make knee jerk decisions because of the short-term picture,” a spokesman said.

The Kantar figures also revealed that Co-op enjoyed its first rise in sales in just over a year, indicating that a turnaround effort may be starting to gain traction. Sales rose by a healthy 1%, the chain’s fastest pace of growth in two years, helping it to maintain its 6.3% market share.

The chain has been opening more convenience stores, cutting prices and recently announced plans to put 1,000 more staff on its shop floors in an attempt to win over shoppers. “The Co-op has been spending a lot of money on its estate and that seems to be having a benefit. It is getting younger, more upmarket shoppers,” said McKevitt. “This could be the start of life getting better for the Co-op.”

That turnaround came despite a 1.6% fall in the price of comparable groceries across the market, according to Kantar, amid an ongoing supermarket price war and falling food prices. Kantar said supermarket prices had been consistently falling since September 2014 and were not likely to rise again until early next year.

One of the biggest influences on price has been the rise of grocery discounters Aldi and Lidl who continue to grow at a pace which far outstrips their bigger rivals. Aldi’s sales rose by 16.6% in the 12 weeks to 19 July according to Kantar data while Lidl’s rose by 11.3%, taking their market shares to 5.6% and 4% respectively.

Morrisons, which has a market share of 10.9%, was the best performer of the big four grocers for the third period in a row with sales falling by just 0.1%. The Kantar figures will be a boost for the new chief executive, David Potts, who is on a mission to improve sales and profits after taking over in March.

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Source: (Butler, 2015)

Butler, S., 2015. Sainsbury’s becomes UK’s second-biggest supermarket. [Online]

Available at: http://www.theguardian.com/business/2015/jul/28/sainsburys-becomes-uks-second-biggest-supermarket#img-1

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Marking rubric

Evaluation Criteria
Weight

V. Good
>70%

Good
60-69%

Average
50-59%

Weak
40-49%

V. Weak
<40%

Environmental analysis

25%

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SWOT analysis

25%

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Key market segments

25%

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Answers the questions asked

5%

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Report structure/flow

5%

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Overall quality of report

5%

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Overall quality of thought

5%

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Qual of refs (& using Harvard)

5%

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