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Reasons to watch
- Possible cut to the full-year dividend
- Ongoing reductions in store opening programme
- Potential for price war with Tesco
Sainsbury's goes back to 1869, when it began in central London as a single store. The store emphasised the quality aspects, with marble counters and uniforms of white aprons for staff. By 1922 it had become the UK’s largest grocery group, with 128 stores by the time founder died in 1928.
The firm was a pioneer of self-service stores, after the chairman visited the USA in 1956. It led the way in new, larger supermarkets, beginning the revolution in UK shopping that transformed the sector.
Diversification came along in 1979 when it formed a joint venture with a Belgian firm to create the Homebase DIY chain, which it eventually sold in 2000 for almost £1 billion.
The 1990s were a difficult time, as Sainsbury’s failed to capitalise on the emergence of loyalty cards and the increasing importance of non-food retailing, meaning that it lost ground to Tesco. Eventually, it ceded its place as the market leader to Tesco, in 1996, a situation that continues to this day.
A relaunch in the late 1990s has led to a revival of the brand, as the firm positioned itself as an upmarket alternative to Tesco. Since then Sainsbury’s position has stablised, although the entrance of new German budget supermarkets has put the overall sector under pressure, while a change to more frequent, smaller shopping trips calls the viability of big supermarkets into question.