Chairman's Report for Sainsbury's

Portfolio: Chairman’s Report - Sainsbury’s Supermarket

1. Chairman’s Report Overview Page 3

2. Legal Influences Page 4

3. Legislation Page 4

I am pleased to announce that Sainsbury’s and completed another successful financial year, we end it with great prospects and having learnt a lot we can continue to put into practice our marketing strategies and maintain improving the business. Ensuring we maintain a positive outlook towards the future, we can keep a consistency in sustaining healthy profit margins with a lot of potential and room to excel.

We welcomed John David Tranfield to the Board in January. John has a wide business background with particular recent experience focusing on consumers and health. He is a great addition to the Board. Andy Green stepped down as a Non-Executive Director in February after two three-year terms. I would like to thank him for his hard work and excellent contribution to the board during a period of significant change for the company.

Our strong performance was delivered despite potential takeover speculation in the last quarter of the year. The Board received a number of proposals from private equity groups all of which were subject to a number of pre-conditions. The Groups concluded they could not be satisfied and decided to withdraw. The Board did not receive a formal bid approach capable of being put to shareholders.

What was clear, however, was that the attention we received was due to our success. A resurgent Sainsbury’s, with a strong brand, high quality store portfolio with development potential and a highly regarded management team, is proving it can deliver the right results in one of the most competitive markets I have encountered. This is clearly an attractive proposition for investors.

Legal Influences

J Sainsbury’s has to by law, abide by many legislations that will affect all characteristics of trading, which means J Sainsbury’s has to be very scrupulous and pedantic with all of its products that it sells.

They must:

Compensate for all legislations
Apply new EU rules or Governments desire to regulate new business activity
Incorporate new legislation that can affect new business or an industry
Include - consumer legislation introduced within the last 5 years relating to the sale of goods/services

Data protection legislation introduced in the last 10 years
Employment legislation introduced in the last 5 years.

Legislation

Sale of Goods Act:

“Under the Sale of Goods Act 1979 traders must sell goods that are as described and of satisfactory quality”.

This translates in to allowing consumers to buy any product or service with comfort. If the product or service does not meet these requirements the customer can reject them and ask for their money back providing they do so quickly. Alternatively, they can request a repair or replacement or claim compensation.

With this piece of legislation ...

This is a preview of the whole essay

Data protection legislation introduced in the last 10 years
Employment legislation introduced in the last 5 years.

Legislation

Sale of Goods Act:

“Under the Sale of Goods Act 1979 traders must sell goods that are as described and of satisfactory quality”.

With this piece of legislation implicated it allows every customer to buy with ease and reassurance, whether or not they are a consumer.

Sainsbury’s has to incorporate this piece of legal context into all their products, allowing regular and loyal customers to buy with ease. When it comes to introducing new products due to the sceptically of the customers Sainsbury’s have to enforce the effort put upon the Sale of Goods Act to encourage new and more sales, allowing all the customers reassurance.

The Sale of Goods Act was then amended in 2002 to compensate for new changes within the law. This means to Sainsbury’s that all their new products and services will have to be altered according to the new law, whether this is just the packaging or re-making the product itself.

This piece of legislation than expanded all through Europe forcing every company to comply with this, as it has now become law abiding.

In the labelling of all of our products, Sainsbury’s does not only comply with the sale of goods act and its amendments (whilst avoiding replicating trademarks and that goods must be “as described”, of “satisfactory” quality and “fit for purpose”. The food labelling regulations (1996) which ensure that labelling on all food products must detail their name, ingredients, sell by and use by dates, storage and usage instructions as well as the name and address of the producer, packer and seller. This year Sainsbury’s have also introduced new labelling which describes the product more easily and in more in-depth detail to the customer, allowing them to make more informed decisions on their food choice, thus affecting their diet.

Supply of Goods and Services Act:

“The Supply of Goods and Services Act 1982 requires traders to provide services to a proper standard of workmanship. Furthermore, if a definite completion date or a price has not been fixed then the work must be completed within a reasonable time and for a reasonable charge”

This basically translates into jargon which means that a business like Sainsbury’s has to be very careful and considerate when producing products and services, ensuring all costs are paid for whilst using safe, well made products to end up with a safe sturdy product. However whilst doing all of this, they must also ensure all employees are paid for, and being treated fairly in satisfactory conditions.

Trading Stamp Schemes:

“On 6th April 2005 the Trading Stamps Act 1964 was repealed by the Regulatory Reform (Trading Stamps) Order 2005. While there is no longer any legislation directly targeting trading stamp schemes, such schemes will continue to be governed by consumer legislation generally”

Releasing Sainsbury’s from extra hassle and obligation in this field.

Sunday and Christmas Day Shopping:

“The Sunday Trading Act 1994 and the Christmas Day (Trading) Act 2004 regulate opening hours of large shops on Sundays and Christmas Day. The Sunday Trading Act also prohibits large shops from opening on Easter Sunday”

This rule will apply to Sainsbury’s as they are a large store with many of them, therefore they can only open for 6 hours on any Sunday allowing only 6 hours buying time for customers. Other stores will also have this rule e.g. Tesco’s, Asda and Woolworths etc…

Unsolicited Items:

“Under the Unsolicited Goods and Services Act 1971, (as amended) it is an offence to demand payment for goods known to be unsolicited, in other words, they were sent to a person without any prior request made by them or on their behalf.

Someone who receives goods in these circumstances may retain them as an unconditional gift, and does not have to pay for or return any unwanted goods. Anyone who receives a demand for payment for unsolicited goods should report the matter to their local Trading Standards Department”

This legislation doesn’t really affect Sainsbury’s to such a great extent, apart from maybe Deliveries with suppliers. However, if they were to receive something they did not ask for, they are entitled to keep it, and the supplier has to compensate the buyer(s) and loses out.

Weights and Measurements:

This legislation is very important and very scrupulous, it means that every product on the shelf has to display a form of weight, most common is (kg) or (g). However, if a product does not display the correct weight for how much is packed. It can be withdrawn and sent back to the supplier, full refund entitled.

If anything ever is found ‘Under-weight’ then it has to be removed from the shelf and from sale as it is unfair to all customers and illegal as if this legislation wasn’t in place, there could be no stopping suppliers etc…

We have also been able to impose our loyalty card scheme to research what products customers are purchasing, allowing us as a store to adapt to the consumer’s needs, whether it means changing which products are available, and the location of them around the store. However, there is a limitation to how much data we can store on customers due to the data protection act, as we require the data subjects permission for sensitive data to be kept. It also states that we cannot retain information on past customers indefinitely, and this can cause problems when looking at changing trends in retail, but we are mostly interested in tailoring our needs exactly to help our current customers.

However we have been hindered of our new international stores and hypermarkets by new laws bought into place after the construction of the stores, it seems in countries such as Malaysia our recent present has acted as a catalyst on the implementation of stricter laws, with 5 year bans on the building of more hypermarkets in some areas. “Zoning Rules” have also been incorporated into the expansion of Sainsbury’s which require that there should be hypermarket for every 350,000 people, all of these laws are enforced by the Ministry of Domestic Trade and Consumer Affairs.

Influences on Sainsbury’s

Businesses operate in an external in which as well as competition from rivals businesses have to take account of legal, political, social and .

A (Social, Legal, Economic, Political, Technological) analysis is often carried out by business planners which enables them to develop more informed strategies (i.e. long plans).

Social factors - relate to change is society and social structures. Changes in the structure of the population, and in lifestyles and behaviour affect buying patterns.

- relate to changes in laws and . Businesses must be careful to keep within the law and to anticipate ways in which changes in laws will affect the way they must behave.

Economic factors - relate to changes in the wider economy. A growing economy provides greater opportunities for businesses to make profits, so businesses welcome rising living .

- relate to ways in which changes in government and government can influence business.

- provide opportunities for businesses to adopt new breakthroughs, innovations, and inventions to cut costs and develop new products.

A business producing confectionery like Cadbury Schweppes examines SLEPT factors in designing new products. For example, social factors that it needs to be aware of include changing patterns of eating. Today many like to eat 'on the go' so bite sized chocolate treats are in great to top up consumers energy supplies. Legal factors to be kept an eye on include regulations about the content of products that can be advertised as chocolate. Economic factors relate to changes in living standards and how these affect consumptions patterns.

Technological change is particularly important today, for example, the of new technologies that have enabled variations on chocolate bars to be produced in an ice cream format. are closely tied up with ones and relate to changing governmental influence. For example, a change from a to a Conservative government would affect taxation policies which would impact on the cost of chocolate production.

- is the process whereby businesses examine the external environment to identify key structural changes in the world around them which affect conditions for their products.