J. Sainsbury Failed It System

1202 Words Jul 19th, 2012 5 Pages
Introduction
In 2005, British food retailer J Sainsbury had to write off $526 million it had invested in an automated supply-chain management system after having poor results. Sainsbury’s is lagging behind its rivals in its sales revenue causing them to be making a loss after a period five years.
Background of the project
Sainsbury as the third largest supermarket in United Kingdom is facing a big problem sustaining their business. They have applied IT into its business which eventually caused the supermarket to write off $140million in IT assets, and a further $120million on its distribution system and also failed investments which led to tremendous loss on its sales and market sales. In 2000, Sainsbury’s began its “business
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Sainsbury was unable to understand its business objectives of whether being a food specialist or built its non-food items for example, clothing, DVD, books, magazines and its non-food aware came incredibly late, the problems has been Sainsbury’s lack of ability to retail clothing. Warehouse management, staff levels, staff training, IT, in-store merchandizing, little advertising support have all proved problematic. It has been unable to successfully integrate clothing into its stores and has certainly not done it as well as Tesco, which has caused them to have a drop in the market share.
Unable to realize its weakness in non-food offer, for example, having insufficient place in store, never cracked this part of its business, as a result making even difficult to compete with its rivals therefore Sainsbury failed to differentiate itself in the marker place. Its significant investment had not been focused on customer but on the things that are invisible to customers, thus customers were neglected.
Sainsbury has made some gains in terms of cost cutting, that will keep itself on target profit wise but it has gone for the above – mid-market spenders and targeting higher spenders is always risky and it is insufficient to support the infrastructure and scale of its business.
Sainsbury’s built an unsustainable business model that became margin driven, focused on short-term profit. The
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