Sainsbury’s is a London based supermarket chain that has been active since 1869. For a long period, it was the largest supermarket chain in the country and currently it is one of the largest with over 1500 stores across the UK. Over the years, the brand has survived in the face of stiff competition through various market techniques.
In this article we will review the political, economic, socio-cultural, technological, legal, and environmental factors that affect Sainsbury’s in the current market. This will provide a holistic analysis of the brand’s current market condition.
Below we will perform Pestle analysis of Sainsbury’s in detail.
Without any doubt the biggest political factor that affects Sainsbury’s currently is the imminent Brexit. It will mean that England will no longer remain a part of the European Union, leading to increased import rates. This would inevitably increase the product pricing of the brand and thus a large number of customers may be lost to competitors that provide cheaper wholesale alternatives. As of now the particular effects of Brexit cannot be gauged but it is expected to lead to adverse conditions for the brand.
Another such factor is the relationship between Qatar and England in the near future. The Sovereign Wealth Fund of Qatar is one of the largest shareholders of the company and any political feud between the two nations may lead to drop in the market shares of Sainsbury’s. This is also a condition that may be affected by Brexit and its political fallouts.
Sainsbury’s is highly dependent on road-based transport means to ship its products all across the UK. This means with the rising cost of both petrol and diesel it is bound to increase its product pricing. Not only does this mean loss of lower-income customers but the lack of fossil fuel in the near future will lead to the brand having to look for alternative means of transport. This coupled with the higher salary expectation of workers are the two primary economic factors that are affecting Sainsbury’s. The higher wage movement is gaining momentum across the UK and Sainsbury’s is expected to meet the demands of its workers to retain its shareholders.
The rise of new Supermarket chains throughout the UK has always been a strong economic factor that Sainsbury’s has to deal with. Brands such as Asda and Tesco have been old rivals of the company and newer ones such as Lidl and Aldi are proving to be a source of added competition in the current market.
A large part of the brand’s revenue was deriving from the sale of fast food items in its outlets. However, the UK population is increasingly shifting towards a health-conscious diet that does not include fast food items. In order to stay relevant in the current socio-cultural climate the brand will need to change its fast food menu to include more healthy options such as salads and organic shakes. This is a global trend that is strongly present within the UK and every major fast food brand is affected by this particular change in consumer behavior.
Another changing customer behavior that Sainsbury’s should cater to is the fair-trade movement. This involves a rise in prices of grains, vegetables, and other farm related products; but as a means of supporting the farmers instead of a profit increment. Products such as chocolate and coffee are affected by the fair-trade movement and the brand should ensure that they are meeting their consumer behavior demands.
The recent introduction of Sainsbury’s eCommerce store is highly helpful towards catering to the current tech friendly generation. However, there are aspects of it that the brand can improve upon in order to provide their customers a better user experience. If the brand starts using modern data based analytical systems, such as big data and AI then they would be able to better understand the demographical needs of their consumers and cater to them. These analytical methods also help increase sales and run better marketing campaigns.
While a brand as big as Sainsbury’s does have different layers of decision making applied to it, it needs to ensure that the systemic changes it introduces are not delayed by business structure. With the quickly changing needs of the customer base the company also needs to be on its toes in order to meet the specific demands. Any delay in regulatory approval can lead to loss in market shares and competitors being able to provide a better experience to the customers. And since the amount of competition faced by Sainsbury’s is absolutely high it needs to ensure that no quarter is given in this aspect.
The legal ramifications of post Brexit economy is also a major factor that the brand should be ready to face. It might be required to change many of its policies while running its outlets that will now fall outside the economic and political sphere of Britain.
A supermarket chain such as Sainsbury’s produces a high level of carbon footprint that is highly adversarial to the current environmental conditions. And with the current climate change movement gaining momentum throughout the UK, the brand needs to ensure that it’s taking active steps to curb its environmental impact. This includes catering to the amount of plastic waste it produces, fossil fuel-based transportation methods, and the high ecological cost of running such an industry.
There is also added pressure on the brand to make quick changes to suit current climate-oriented needs since it is an industry leader. And apart from being a method of meeting customer demands, catering to environmental impacts is truly the need of the hour for operations as large as Sainsbury’s.
The above PESTLE analysis of Sainsbury’s provides a deep insight into the brand’s current condition in the market and how it is expected to perform in the near future. The supermarket giant has been able to exist in the market for more than a century through calculated upgradations, and these are the current factors that it will have to tend to.