PESTEL analysis – Political Factors

• Increasing globalization, presents a challenge as well as an opportunity to Sainsbury's. The challenge will be to compete against unknown forces and to source the best quality/financially viable products from world over. Sainsbury's can enter the markets of emerging companies through joint ventures or partnerships to explore these new markets, although it does not have any plans on the horizon to do so. Development to the non-domestic market, means towards a "global localization" (Shanghai; Bangladesh)

• The on-going investigation of price fixing amongst the big four retailers within the UK can have some negative impact to the industry in general and Sainsbury's in particular, as it is at the forefront of this allegation (Rigby 2008). Although Sainsbury's is very well established among consumers, these allegations can lead to a negative public image, as the consumers might feel cheated.

• In the UK, the Government is to decrease the rate of corporation tax from 30% to 28%, which will save big companies like Sainsbury's significant sums of money (HM Treasury 2008).

For employment legislations, the government encourages retailers to provide a mix of job opportunities from flexible, lower-paid and locally based jobs to highly skilled, higher-paid and centrally-located jobs (Balchin, 1994) aim to recruit and retain the best people, from backgrounds that reflect the communities we serve; “you can” program

PESTEL analysis – Economic factors

• The rapidly increasing global food crisis has increased food prices all over the world, which will result in rising purchasing costs for Sainsbury's (economist.com 2008 [online]). This will have an impact on the margins of the organisation and might lead to passing over the cost to consumers by increasing prices of most things in the supermarket. Furthermore, rising fuel costs will have implications right throughout the supply chain of Sainsbury's leading to an overall situation of increasing prices.

• The credit crunch??(信贷紧缩) can have a two way impact on Sainsbury's as it also runs a financial services company with HBOS (Annual Report 2007). The credit crunch might decrease the purchasing power of consumers and though they will still buy the essentials they may be more cautious. They may also spend less on luxury items, something that has a greater profit margin for Sainsbury's. As far the Sainsbury bank is concerned, the credit crunch directly affects its ability to provide credit especially as it is not an established name in the financial services industry.

• Stiff competition within every segment of the retail sector has lead to retailers giving a lot of incentives to the consumers (Annual Report 2007). This will affect Sainsbury’s, as the prices have to be driven down most of the time.
Re-launched our premium Taste the Difference range

PESTEL analysis – Social factors

• Nowadays there seems to be more emphasis on fresh, easy style cooking. This serves an opportunity for Sainsbury's to encourage new recipes and unfussy eating.

• There has been a huge emphasis by the government to promote healthy eating (eatwell.gov.uk 2008 [online]), primarily due to the increasing level of obesity within the UK (department of health 2008 [online]). This has lead to many consumers to shift towards healthier food. This presents an opportunity to Sainsbury's to stock up with more healthy food or create healthier foods at a cheaper price than other manufacturers so as to benefit from this new trend.

Do well for communities （create over 6,000 jobs; local charities; Comic Relief and our Active Kids program——－create a good image

Attention to consumer advice（products designed for customers with allergies and intolerances）---should not only for crisis situation
Current trends indicate that British customers have moved towards ‘one-stop' and ‘bulk' shopping. Increased the amount of non-food items available for sale.

Demographic changes such as the aging population, an increase in female workers and a decline in home meal preparation mean that UK retailers are also focusing on added-value products and services. In addition, the focus is now towards; the own-label share of the business mix, the supply chain and other operational improvements, which can drive costs out of the business. National retailers are increasingly reticent to take on new suppliers (Clarke, Bennison and Guy,1994; Datamonitor Report, 2003).

PESTEL analysis – Technological

• The Internet phenomenon seems to be ever growing within western countries. It is predicted that by 2011 online retail sales in Europe will have reached Eur263bn, with British shoppers accounting for more than a third of all revenue. The Internet accounts for 8% of global advertising spend and are growing rapidly (The Economist, 2007). If used cleverly, Sainsbury's can leverage the Internet to its advantage. Competitors like Tesco use their own online delivery model successfully. However, specialist delivery companies like Ocado (working in partnership with Waitrose) provide an alternative for the outsourcing of non-core work. Click and Collect

• One of the downsides of supermarket shopping is the queuing system customers often find themselves in at the checkout. Self-checkout machines, employed by Asda and Tesco, can help solve this problem, especially for customers who have to queue up for very few items. Furthermore, self-checkout machines could help in Sainsbury's opening stores for 24 hours, which might help boost sales.

• Although not yet popular, RFID (Radio Frequency Identification Device) 射频识别装置。Technology can be used for significant benefits to the supply chain of Sainsbury's. If adopted, this technology will lead to fewer inventories for the supermarket firms leading to a leaner, more profitable organisation (directions magazine 2008 [online]).

Environmental technology

PESTEL analysis – Environmental factors

• A lot of emphasis western companies has been on the role of big companies in reducing carbon footprint and increasing energy efficiency (Bream 2008). This is just not a backburner issue anymore and every firm will have to prove they are reducing their impact on the environment, meaning Sainsbury's will have to invest more on green issues. (Zero food waste to landfill program；reduced the amount of paper used for store receipts double-side printing; Geo Exchange technology to capture unused heat and store it deep underground for later use)

• Other important ethical issues, like sale of organic food and the ethical treatment of animals（animal welfare）, clearly effect Sainsbury's on various levels. The growing importance of such issues means that they will have to cater to those consumers as well as to consumers governed by price. This is a sensitive issue, as they will have to balance their public stand on environment without losing consumers due to the increase in prices.
Nature-resource-based view of the firm----- Internal operating; External Coordination; Sustainable development

PESTEL analysis – Legal factors

• With ever stringent laws on food and drinks, Sainsbury's will have to follow more and more packaging and labelling policies to deal with these, which will be an additional financial burden on the company.

• Due to its interests in financial services, there is ever more legal scrutiny in the operations of Sainsbury bank, which means there is more responsibility regarding legal compliance and other risk measures.

British environmental tax (2007) on the impact of large-scale retail enterprises
UK government carbon reduction commitment (CRC) as atax-neutral plan, to establish the purpose is to create an incentivefor businesses to promote the retail business to improveperformance in energy saving and environmental protection----- embarrassing situation＝ Funds are no longer return to participate in corporate hands

Economist(2008).http://www.economist.com/displaystory.cfm?story_id=9358986 [Online]. [Accessed 6th May 2008].

HM Treasury (2008). Budget 2008. Stability and opportunity: building a strong, sustainable future. 12 March 2008. www. hm-treasury.gov.uk [Online]. [Accessed 7th May 2008].

Rigby, E. (2008). 'Sainsbury attacks 'scandal' of price inquiry', Financial Times, London, 3 May.