Task 2
Economic environment
Sainsbury- the current economic environment for Sainsbury is one of coming out of recession as even though the recession started in late 2008 , because of this buyer confidence is low and currently cheaper supermarkets such as Aldi are more favoured due to price. Currently the UK GDP is 41,787.47 USD which is a 2% increase over 2015, this is good for Sainsbury as a rise in GDP suggests that more people are making money in the UK which means lower levels of unemployment and this is what Sainsbury wants as that means that there are more people with more disposable income around in the UK. This will change the customer’s confidence in the market as since they have more money, their confidence will go up making them far more likely to spend money on more things resulting in an increase in sales for Sainsbury. Inflation in the UK has dropped to 0.3% in this month which in the short term will be good for Sainsbury as if the inflation remains stable at this level; investors will be far more confident about investing into businesses, this will allow Sainsbury to access a higher rate of growth for a period of time. However in the long term low inflation wouldn’t be good for Sainsbury as a business as low inflation can lead to rises in unemployment levels, particularly in the younger generations, this means less people with disposable income and Sales decrease for Sainsbury, in addition to that, low unemployment levels has a high correlation with high levels of social problems. These high levels of social people does influence the amount of people who do their shopping at supermarkets as at high level of social problems more people are likely to stay at home and order online from places such as Amazon groceries instead of using Sainsbury. Currently, in the UK, interest rates are at 0.5% and for a business such as Sainsbury this holds many benefits