Last updated 27 April 2023
J Sainsbury Plc
J Sainsbury Plc is one of the UK’s traditional Big Four supermarket chains, along with Asda, Tesco and Wm Morrison.
The group’s origins date back to 1869, when John James and Mary Ann Sainsbury opened their first small dairy shop at 173 Drury Lane, London. By 1882 John James Sainsbury had four shops and had plans to expand his business further. He opened a depot in Kentish Town, north-west London, to supply this growing chain and, on the same site, built bacon kilns that produced the first Sainsbury brand product.
Today, J Sainsbury has annual sales of more £35 billion a year.
Financials
After a difficult period, revenue grew strongly at J Sainsbury but this growth slowed and then stopped due to the impact of the COVID-19 pandemic but has since recovered. In the 12 months to March 2023, group revenue rose to £31.5 billion (2022: £29.9 billion) but underlying profit before tax fell to £690 million (2022: £730 million). Statutory profit before tax slumped to £327 million (2022: £854 million).
To view the financials for J Sainsbury Plc, visit Companies House and use Company ID 185647.
Developments
The acquisition in 2016 of the Home Retail Group, which included Argos, is had a transformative influence at Sainsbury, which at the end of the 2016 financial year was trading across 601 UK supermarkets in the United Kingdom and had a property portfolio, including share of joint ventures, valued at £10.6 billion.
Like most of the major grocery chains, J Sainsbury remains increasingly focused on smaller-sized stores in terms of new openings but there has been a significant slow-down since 2011/12, when 21 new stores, 24 extensions and 47 convenience stores were opened and added 1.5 million sq ft of space to the estate.
Glenigan’s research covering projects starting on site either directly for J Sainsbury or where the group would be the tenant also bears out this shift towards smaller schemes and the impact this is likely to have on construction spend. Although there was rise in the value of projects started between 2010/11 and 2011/12, after this point there was a serious decline. Between 2012/13 and 2013/14, the value of site starts slumped by 46% to £173.7 million.
A reprioritisation included a greater regional focus on London and the South East, and in 2013/14 J Sainsbury announced plans to open 50 new convenience stores in London and the South East.
In 2016, Sainsbury’s began integrating Argos stores into its estates after the Home takeover. After the pandemic broke out, 120 standalone Argos stores were closed permanently and by March 2024 a total of 424 Argos stores are due to close, reducing the estate to 100 outlets.
In the 2023 financial year, Sainsbury’s did not open any new supermarket (2022: 4) and closed three less profitable stores (2022: 11). The group did open 13 convenience stores (2022: 11). Two standalone Argos stores were opened alongside 24 new Argos stores inside Sainsbury”s while 45 standalone Argos stores closed
Glenigan Data
In the 12 months to Q1 2022, J Sainsbury let 24 contracts valued at £250,000 or more (2022: 36) and the total value of these projects was £38.7 million (2021: £53.1 million).
Conclusion: Work slowing as focus shifts
Construction work has slowed considerably at Sainsbury’s as emphasis shifts to pricing. In the latest year, no new supermarkets opened, while across the last two years Glenigan’s research shows construction spending dropping by 58%.
The group did not feature in Glenigan’s rankings of the industry’s top 50 clients in the 12 months to Q1 2022, but only Aldi and Lidl spent more in terms of contracts awarded. The bulk of J Sainsbury’s work remains smaller store refurbishment work and the value of the average contract awarded by the company fell to £1.01 million (2021: £1.47 million).
In this period, the largest project where a contract was awarded to a main contract was a £6.6 million supermarket at Cockerel Rise in Desborough, Northamptonshire (Project ID: 09326020).
There are a handful of larger developments in the pipeline, such as an £13 million new store and petrol station in Pontyclun, Mid Glamorgan, where work start in the spring of 2023 (Project ID: 12353529) and a £7 million store in Southport (Project ID: 12349219). However, the bulk of projects are valued at £1 million or less and the group is also selling land, often for residential development. Recent examples include 837 flats at Chapel Place in Ilford, which is being developed with Telford Homes (Project ID: 15403753).
Going forward, J Sainsbury will open three supermarkets and around 25 new convenience stores in the 2024 financial year and close one supermarkets and 5-10 convenience stores. The group also expects to open around 30 Argos stores inside Sainsbury”s, and close around 100 Argos standalone stores.
The pandemic offered significant challenges and accelerated the closure of Argos stores, but capital spending will continue as the group looks to service a shift to home deliveries with more fulfilment centres and collection points and J Sainsbury is set to remain a key construction client.
Winning work with J Sainsbury Plc
J Sainsbury is one of a raft of major UK businesses, along with British Airways and Vodafone, to sign up to the governments’ Supply Chain Finance scheme aimed at helping supply chains maintain their cash flows at lower finance costs. The scheme entails banks paying invoices raised by the supply chain against larger companies in advance before recovering the debt from those tier one contractors. The banks will charge a small interest rate to firms in the supply chain for this service.
J Sainsbury was one of the pioneers of construction management, working with groups such as RG Group. In 2001, J Sainsbury dropped its preferred list of construction managers and moved to prime contracting. More recently, Glenigan’s data shows that Sainsbury’s tends to use smaller specialists such as Base Build.
In its store-opening programme, J Sainsbury has used a wide range of external developers from Development Securities to Barratt.
Key J Sainsbury procurement contacts include:
Director of Group Procurement at J Sainsbury – Matt Stallard, tel: 020-7695-6000
Matt.stallard@sainsburys.co.uk