Sainsbury’s Losses Underline Changing UK Retail landscape: MBA News

Further evidence that the UK retail sector is undergoing a dramatic shift was provided yesterday by Sainsbury’s – one the country’s ‘big four’ grocery stores – which posted losses of 3% for the quarter ending March 15, ending nine years of continuous growth in sales.

It is the last of the ‘big four’ to experience a decline in sales, with shoppers turning to cheaper alternatives at the expense of these stalwarts of the retail sector, in spite of the economic recovery claims expected to announced in today’s UK Budget. Sainsbury’s added that market growth was now at its lowest rate since 2005.

UK retail sector giants afflicted by ‘tough comparatives’

“We have seen a decline in sales in the quarter reflecting tough comparatives,” said Justin King, Sainsbury’s CEO.

Retail sector analysts argue that this is evidence of a wider malaise. “This sector is in structural decline, with no end in sight,” HSBC’s David McCarthy told The Guardian. While Natalie Berg, global research director at Planet Retail said, “Today’s results are reflective of the incredibly challenging UK trading environment. There are more ways to shop than ever, but at the same time people are putting fewer items in their basket. This puts a huge amount of strain on retailers like Sainsbury’s.”

Last week, another of the ‘big four’, Morrisons, incited panic on the stock market floor when it warned its profits would have to be halved in a bid to turn its trading fortunes around. In total, £2 billion (c. US$3.3 billion) fell from the value of Sainsbury’s, Tesco and Morrisons on the London Stock Exchange amid fears of a price war. Yesterday, Shore Capital, advised investors to sell Tesco shares for the first time in almost 20 years. 

Demand for MBAs in the retail sector has been growing worldwide in recent years according to the results of QS’ annual jobs and salary trends reports. However, the retail sector offers graduates some of the lowest average MBA salaries around at under US$80,000 per annum across North America and Western Europe. The current dilemma facing retailers like Sainsbury’s may see them crying out for the type of innovative management skills an MBA can bring to the table, but whether they will be in a position to hire intensively remains to be seen.