J Sainsbury PLC

Stamford House
Stamford Street
London SE1 9LL
United Kingdom
(1) 921-6000

Public Company
Incorporated: 1922 as J. Sainsbury Ltd.
Employees: 82,000
Sales: £5 billion (US$9.04 billion)
Stock Index: London

Supermarkets, hypermarkets, and other grocery outlets clustered tightly in the south of England form the nucleus of Britain’s largest food and wine retailer: J Sainsbury plc, or Sainsbury’s, as it is widely known. The company’s expansion over a period of 120 years has been cautious but inexorable, accelerating in the past two decades, and recently venturing overseas. Unlike other major food companies that have diversified into other business areas to counter the slow growth expected in the food market, Sainsbury’s is simply building the retailing business in which it excels.

Sainsbury’s is not only Britain’s largest retailer of food and wine but also its most respected, according to nationwide surveys of city analysts and company directors. The company has earned top or near-top ratings for product and service quality, successful development, profitable pricing, overall financial performance, advertising and marketing, superior management, and recruitment, training, and retention of high-caliber employees. More than a third of Sainsbury’s employees own shares in the company.

Sainsbury’s was off to a romantic but practical start in 1869 when two young employees of neighboring London shops met, married, and started a small dairy store in their three-story Drury Lane home. Mary Ann Staples, 19, had grown up in her father’s dairy business. John James Sainsbury, 25, had worked for a hardware merchant and grocer. Their shop was a success from the start, as both John and Mary Ann had the business knowledge and capacity for hard work that it took to win the loyalty of the local trade. Their passion for order, cleanliness, and high-quality merchandise made the shop an inviting place, in contrast to the prevalent clutter of many tiny family-owned shops and the insanitary conditions of the street vendors’ stalls and carts.

Seven years later the Sainsburys opened a second shop in a newly developed section of town and moved into the upper portion of the building. Within a few years, they had opened several similar branches, planning to have a shop for each of their sons to manage when he grew up. By the time their six sons were adults, the branches far outnumbered them. Yet caution has always been characteristic of Sainsbury expansion; they regularly passed up opportunities to buy groups or chains of stores, preferring to develop each new store independently.

The passion for high quality led them to a turning point in 1882, when they opened a branch in Croydon. They used advanced design and materials that had an elegance not attempted in the other shops and made the store easy to keep clean. The walls, floor, and counter fronts were tiled, the countertops were marble slabs. Customers were seated on bentwood chairs. The store’s cleanliness—still a rarity in food shops of that time—and elaborate decor helped attract more prosperous customers; it was an instant success. Several similar shops were added during that decade, while Sainsbury’s also developed a less elaborate design for suburban branches opened during those years. In these, business could be done through open windows, as in the common market areas, but the design also attracted customers to come into the store to see a greater variety of food.

In 1891, Sainsbury’s moved its headquarters to Black-friars, where it remains. The location provided easy access to wholesale markets and transportation. To obtain the best quality in food, Sainsbury’s has always kept in close touch with suppliers, and it controlled and distributed stock from a central depot until the 1960s.

By the turn of the century sons John Benjamin, George, and Arthur were working in the family business; they and other company employees were trained with equal care and attention to detail. Alfred and Paul went through the same training when they joined the company in 1906 and 1921 respectively. Frank, the third son, took up poultry and pork farming in 1902 and became a major supplier. By the turn of the century, in terms of numbers, rivals seemed to be outdistancing Sainsbury’s. Lipton’s, the largest, had 500 stores. It took Sainsbury’s another 14 years to open its 115th branch. But Sainsbury’s continued to place the highest priority on quality, taking the time to weigh each decision, whether it meant researching suppliers for a new product, assessing the reliability of a new supplier, or measuring the business potential of a new site.

The outbreak of World War I slowed expansion plans even further. Rationing and shortages of food, particularly fresh produce, led to the creation of grocery departments selling jams, spices, potted meat, and flour—all bearing Sainsbury’s own label. Women began attending the training classes at the Blackfriars headquarters, to replace the male employees who had left for military service. Some worked in the packing plant on Sainsbury-label foods; others served as salespeople in the stores.

Eldest son John Benjamin took much of the initiative in the postwar years, adding new grocery lines while retaining his father’s insistence on high quality. By 1922 there were 136 branches, many of them along the new suburban rail lines, and the firm was incorporated. Mary Ann died in 1927 and her husband in 1928, leaving John Benjamin in charge. By this time, so much public attention accompanied branch openings that when Sainsbury’s opened a branch in Cambridge, it published an apology in the local newspaper for the impact of a huge opening day crowd. Altogether, 57 new branches were opened between 1919 and 1929, and the gilded glass Sainsbury sign had become a universal symbol of a spacious, orderly interior displaying foods of the finest quality.

There was an apparent break with tradition in 1936 when Sainsbury’s bought the Thoroughgood stores, a chain of nine shops in Britain’s Midlands. But the purchase was made with the same care and emphasis on quality that had distinguished all other Sainsbury branches. Stamford House, which had been built in 1912 as an extension of the headquarters at Blackfriars, was extended to provide more space for the centralized supply procurement and distribution that maintained quality control for all branches, which by this time numbered 244. Specially designed lightweight vans had replaced horse-drawn vehicles, further speeding deliveries.

World War II not only slowed Sainsbury’s growth, through shortages of food and labor, but also brought the stores into the line of fire. Some branches were totally destroyed; others were extensively damaged. Vehicles carrying mobile shops carried on trade as far as possible in the areas affected by the Blitz. But the evacuation of bomb-damaged areas made it impossible to carry on the centralized procurement and distribution operation that had provided efficiency, economy, and standardization of products and services. Along with other wartime restrictions, this caused sales to dwindle to half the prewar level.

John Benjamin’s sons Alan and Robert, who had shared the general manager’s post since their father’s retirement in 1938, became deeply aware of the crucial role of communications during the trying days of this wartime decentralization. The JS Journal, begun in 1946 (and its sister publication, the Employee Report, begun in the late 1970s) exemplifies the thorough job of reporting that to this day keeps staff members abreast of company developments and business conditions. Both publications have won national awards for excellence.

Long before the last of the wartime restrictions were lifted in 1954, the brothers had begun an aggressive recovery program. Basic operations were recentralized to regain the economies of scale that kept prices down while retaining a substantial profit margin. Alan studied America’s burgeoning supermarkets and opened the first self-service Sainsbury’s in June, 1950 in Croydon, where his grandfather had opened his “turning point” store nearly 70 years earlier.

Expansion in the 1950s often meant converting existing stores to supermarkets in addition to adding new outlets. In 1955, the 7,500-square-foot Sainsbury’s at Lewisham was considered the largest supermarket in Europe. By 1969, Sainsbury supermarkets had an average of 10,000 square feet of space. Today’s supermarkets and hypermarkets have tripled that amount.

John Benjamin and Arthur were the only two of the founders’ sons whose own sons joined the family business. Arthur’s son James, who had joined the company in 1926, was named Commander of the Order of the British Empire for his accomplishments. He created new factory facilities at Sainsbury’s headquarters in 1936 and also set up the Haverhill line of meat products.

John Benjamin’s sons Alan and Robert, and Alan’s son John, were also honored for their work. Alan was made Baron Sainsbury of Drury Lane in 1962, and his son John was made Baron Sainsbury of Preston Candover in 1989. Robert was knighted in 1967. Today Alan and Robert share the presidency of Sainsbury’s, John is chairman, and Robert’s son David is deputy chairman.

With typical caution, Sainsbury’s did not actually use the word supermarket in its own communications until the late 1960s, even though it owned almost a hundred. Nonetheless, the company was at the forefront of new technology. In 1961, for example, Sainsbury’s became the first food retailer to computerize its distribution system. In the late 1980s, electronic cash registers at the checkout counter were replaced by scanning. Multibuy, a special feature of the scanning system, automatically applies a discount to multiple purchases of certain designated items. Spaceman, a microcomputer planning system, uses on-screen graphics to plot the allocation of merchandise to specific shelf space in the stores. EFTPOS, an electronic funds transfer system, allows customers to use debit cards to make purchases.

Sainsbury’s centenary, 1969, sparked a series of rapid changes. Alan’s son, John, became chairman of a new management tier, which now reported directly to the board of directors. Departmental directors were given greater responsibility for operating functions to strengthen the centralized control that had always been company policy. With ordering, warehousing, and distribution computerized, strict controls on the speeded-up activity were vital. Sainsbury’s became a public company in 1973, two years after making a name change: the period after the initial J was dropped.

In the 1970s Sainsbury’s began to make significant additions to its nonfood merchandise for the first time. The company’s first petrol station, a convenience for shoppers, was opened in 1974 at a Cambridge store. To gain the economies of direct supplier-to-store deliveries, Sainsbury’s formed a joint venture with British Home Stores in 1975, launching a chain of hypermarkets called Savacentre. Sainsbury’s retained control of all food-related operations, leaving nonfood lines to its partner until 1988, when Savacentre became a wholly owned subsidiary of Sainsbury’s.

Homebase, another chain, was in the planning stage by 1979. In 1981, the first Homebase home and garden center was opened. Sainsbury’s owns 75% of Homebase; the other 25% is owned by GB-Inno-BM, the largest Belgian retailer, known for its worldwide leadership in merchandising products for do-it-yourselfers.

In 1983, Sainsbury’s began to acquire an interest in Shaw’s Supermarkets, a New England supermarket chain. Shaw’s was founded in 1860, and has a similar history of high-quality food at the lowest prices obtainable through efficiency of management and distribution. And like Sainsbury’s, Shaw’s has also been at the forefront of computer technology. By 1987, Sainsbury’s had completed purchase of 100% of the 60 stores in Massachusetts, Maine, and New Hampshire, and had plans to open additional stores in that area.

Personnel policies at Sainsbury’s have adhered closely to the principles established at its founding: thorough training, open communication, and continuing training on the job. The company recruits actively at schools and universities, preferring to “grow its own talent,” but holding employees to high standards of performance. With other leading companies and the City University Business School, Sainsbury’s conducts a practical management course, the Management MBA. Sainsbury’s employees participate in profit sharing and share option schemes.

The company’s community involvement has been active, taking many forms. John Sainsbury addressed the London Conference on saving the ozone layer early in 1989. The only retailer invited to take part in the conference and the associated exhibition, he presented details of the technological changes made in Sainsbury’s aerosol products and plant operations to eliminate chlorofluorocarbons from their operations. (Sainsbury’s high-quality private-label products are a booming business.) Incubation of small start-up businesses, arts sponsorships, and grand-scale charity drives are other ongoing projects.

John James Sainsbury’s principles and passions are alive and well, and continuing to foster cautious growth under the leadership of the family business’s fourth generation. The company and family continue to control the majority of shares, and management seems intent on continuing the practices that have brought it success.

Principal Subsidiaries:

Homebase Ltd. (75%); J Sainsbury Properties Ltd.; J Sainsbury Farms Ltd.; The Cheyne Investments Ltd.; The Cheyne Investments, Inc. (USA); The Sainsbury Charitable Fund Ltd.; J Sainsbury (Finance) B.V. (Netherlands); Savacentre Ltd.; Shaw’s Supermarkets, Inc. Associates; Haverhill Meat Products Ltd. (50%); Breckland Farms Ltd. (50%); Kings Reach Investments Ltd. (28.76%).