The Supermarket

The early Supermarket

In the fifties a new way of shopping came to Britain; it was called the supermarket. Initially the innovation involved goods being displayed in isles and customers going round a selecting their purchases themselves. Sainsbury's opened their first self service shop in Croydon in 1950, but most Sainsbury's shops in the sixties were a series of counters where you went to get served with your requirements.

The shelves of the new supermarkets were stacked with goods each having a price label stamped on it. The supermarket also had a large store to the rear with stocks which could last for several weeks if not months. The supermarket required fewer specialist staff. There was no butcher advising you on cuts of meat you simply helped yourself from the prepared trays. Later a frozen foods section became important. At first most households didn't have a fridge let alone a freezer. But the freezer section soon became an important part of the new supermarket.

In 1965 one sainsbury's had twenty counter staff and 6 backroom staff. And 5 office staff. and a manager (all full time staff). When the counters were done away with the branched moved to a new store with 6 times the floor area. The range of products increased to include vegetables and bread. The twenty shop staff became 6 checkout girls a floor manager and 3 full time store people with 4 part-time shelf fillers. Despite a turnover increase of 4 fold the number of office staff were unchanged. The skills of the specialist staff like the butcher were no longer required. Cutting the joints was done by the supplier. The advice he gave was then sold in a magazine, or given away as a recipe sheet.

The effect of IT on stock control.

Information technology came after the change to the supermarket. In 1961 Sainsbury's scored a first by computerising stock control. ( this meant that stock levels were stored on a central computer, there were no PCs in Britain until 1981 so no store had a computer in it). Batch data entry systems were used initially. But in 1979 Sainsbury began experiments with computerised checkouts at a branch in Crawley. This innovation gradually spread. It is now the norm for most stores.

The important innovation was the bar code. This allowed computers to be linked to tills to allow stock control to be live with real data coming from the point of sale. This meant that the period of time required to place an order was greatly reduced. Stock is now ordered once a day for delivery the following night. There is now a single ordering system for all goods, within the supermarket All stock comes from a single depot This is much better than several discrete ordering processes, for various product types. Labelling each item was no longer necessary If the price of an item changed the price component of the stores database was changed no one had to go and relabel all the stock.

The effect of IT on distribution

During the 1960s the size of supermarket chains increased rapidly as the trading areas expanded. Some chains like sainsbury's had a single central warehouse for all stock, others like the co-op had stores depending on the type of goods. For those with a single central store it became necessary to decentralise the distribution system through the establishment of a network of regional depots. Close centralised control of the company's administration and trading standards was retained through the development of increasingly sophisticated computerised stock control.

In the late eighties and early nineties supermarkets went over to Just in time (JIT) stock control. This was facilitated by linking the local stock control computers to a central computer. The store no longer needed a large store area to the rear this became more space available for the shoppers and fewer storeman workers were needed because records were kept centrally (There was an increase in staff at central office - but this was less than 10% of the jobs lost in the stores). The quantity of stock held by the store was greatly reduced. Suppliers were required to hold the stock ready to deliver it at short notice. This reduced the cost of stock.

JIT requires three things. Good stock control - in particular accurate time stamped data. It also requires good communications ( achieved through modem links with local computers talking to central ones). Recently, with the petrol blockade, the third requirement of JIT: good logistics (transport infra structure) became evident. This also revealed how little stock of petrol the super markets keep. They ran out the same day as the delivery failed in many cases. Most specialist garages ran for several days.

More recently this computer control of stock has gone one step further. ASDA has 15 distribution depots through out the country. Companies supplying the supermarket are required to log on to a site that shows stock levels of the suppliers goods that ASDA holds. The supply company signs a contract to say they will maintain stocks at a given level in each of these depots, all the problems of transport thus become the supply company's

Changes in the finance department.

The process of introducing IT was further enhanced when in 1988 payment by debit card was introduced. This had two effects the customer could pay without having to have cash available, and the supermarkets went into the financial processes industry. Latter this lead to cash being dispensed from the tills Cash points at the store. and eventually many opened as banks.

The debit card had a major effect on employment at the supermarket. Less was paid for by cash and the tellers were given more responsibly for counting the money at the end of a shift. Fewer and fewer staff were needed behind the scenes to count cash in the office. Credit cards also meant the possibility of data acquisition about customer purchases.

Sainsbury's Bank opened for business on 19 February 1997. A joint venture between J Sainsbury plc and Bank of Scotland, Sainsbury's Bank was the first Supermarket Bank in the UK.

This ground-breaking venture has attracted over 1.25 million customers with deposits in excess £1.6 billion and advances, including undrawn commitments, of £1.5 billion. Their current product range includes:

• Instant Access Savings Account.
• Direct Saver Account.
• Fixed and Step Rate Bonds.
• Direct ISA.
• Personal Loans.
• VISA credit card.
• Mortgages; buy to let mortgages; personal loans, Options Mortgage, Fixed, Variable and Discounted Mortgages, Buy-to-Let Mortgage.
• Home and Contents Insurance, Travel Insurance and Pet Insurance.

The Use of data Warehousing techniques

Shortly after this in 1991, Sainsbury introduced the spend and save loyalty card. This card allowed research into customers purchasing patterns to be conducted. Data warehousing information enabled many policies to be formulated. These varied from the location of items in the store. For example alcohol was mostly bought by males. Males more often picked up novelty items so many stores place the alcohol furthest from the entrance so the male had to go past as many potential purchases as possible.

The concept of the loss leader was introduced. Items like milk and bread were found in nearly all customers baskets. Interviews with customers reflected the idea that was all they had intended to purchase, but walking through the store made them realise they "needed" other item. Supermarkets started selling these essential items as cheaply as possible - eventually at a loss.

Research into other companies sales was also important - although I doubt that many British companies went to the extent of emptying the rubbish bins of competitor and analysing the thrown away purchase stubs. (WalMart employees did this for several years in the states.) Some suppliers like Heinz might however use a sales pitch based on Asda is selling more of our beans than you are.

Other effects of IT

Once the IT bug had bitten supermarkets found new uses for their IT. Sainsbury's established an early lead in the introduction of in-store technology like scanning, Eftpos, computerised stock control and sales-based ordering: techniques which brought it huge competitive advantage. It also became a world leader in the use of computerised energy management which, together with measures such as heat recovery from refrigeration plant and in-store bakeries, brought substantial reductions in the company's energy consumption.

The Internet

Most, but not all supermarkets make use of the internet, often they tie in television personalities to link with there adverts See Sainsbury's pages to get an idea of this. many companies are now offering a home delivery service with purchases over the internet. The specialist advice once offered by the butcher or greengrocer is now available here. Wines are often discussed at some length. The quality of what's on the web varies enormously from Nil (J. Morrisons) to a vertual muesem(J. Sainsbury)

The effect on employment

Sainsbury's Supermarkets employs over 138,000 people. Of these, 70% are part-time and 30% full-time. 58% of employees are women. A large Sainsbury's Supermarket offers over 23,000 products - 40% of these are Sainsbury's own brand. In addition to a wide range of quality food and grocery products, many stores offer bread baked on the premises, delicatessen, meat and fish counters, pharmacies, coffee shops, restaurants and petrol stations. Sainsbury's Supermarkets serves over 9.5 million customers a week and as at May 2000 had 432 stores throughout the UK. Nearly 60% of our stores are in town-centre or edge-of-centre locations, many of these built on previously derelict sites.

The number of employees in a store like Sainsbury's has increased over the years but the nature of the jobs has changed drastically. The skill required in most jobs has been reduced. There are a small number of highly skilled IT jobs. Many jobs have become part time. The hours worked by a given employee are fewer (when compared to 1939). The extra jobs have been created at the expense of those in local stores.

IT has greatly reduced the number of backroom jobs, the proportion of office staff and stockmen is greatly reduced. The company structures have become much thinner. Often with a single manager and then the workforce (two tiers) Whereas in 1950 there would have been 3 or 4 tiers in even the smallest stores. IT has also effected the location of Jobs. Many jobs that were at branch level are now at in regional centres or head office. An example of this would be the tax control clerk. Other jobs are lost altogether for example Wages clerks are no longer needed. Wages are often pain straight into a bank account and wage slips come through the post. In some cases these jobs are no longer actually with supermarket employees. An order clerk is no longer needed when the computer does the job. But the supply company may find it is doing many of the tasks once done by the supermarket, they any need that type of worker.

© LEV