Open Research Online The Open University’s repository of research publications and other research outputs An Investigation into the Effect that Technology had on the Strategies of J. Sainsbury plc, Tesco plc and Safeway plc: With a Particular Focus on the Period 1980 to 1990 Thesis How to cite: Morgan, Chris (1998). An Investigation into the Effect that Technology had on the Strategies of J. Sainsbury plc, Tesco plc and Safeway plc: With a Particular Focus on the Period 1980 to 1990. PhD thesis The Open University. For guidance on citations see FAQs. c 1998 Chris Morgan https://creativecommons.org/licenses/by-nc-nd/4.0/ Version: Version of Record Link(s) to article on publisher’s website: http://dx.doi.org/doi:10.21954/ou.ro.0000fec1 Copyright and Moral Rights for the articles on this site are retained by the individual authors and/or other copyright owners. For more information on Open Research Online’s data policy on reuse of materials please consult the policies page. oro.open.ac.uk An Investigation into the Effect that Technology had on the Strategies of J. Sainsbnry pic, Tesco pic and Safeway pic: With a Particular Focus on the Period 1980 to 1990 by Chris Morgan MA (Warwick), DMS (Lancbester Polytechnic) WL Ex., M.I.Mgt, M.B.C.S. Submitted for the degree of Doctor of Philosophy at the Open University, Department of Technology ProQuest Number: 27696844 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a com plete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. uest ProQuest 27696844 Published by ProQuest LLO (2019). Copyright of the Dissertation is held by the Author. All rights reserved. This work is protected against unauthorized copying under Title 17, United States C ode Microform Edition © ProQuest LLO. ProQuest LLO. 789 East Eisenhower Parkway P.Q. Box 1346 Ann Arbor, Ml 48106- 1346 A bstract This research is focused on three food multiple retailers, Sainsbury pic, Tesco pic, and Safeway pic. The research is designed to e 3q>lore the relationship between technology and strategy in these organisations. The currently held view among the researchers and managers of these organisations is that technology has a limited impact on the processes that formulate strategy, and as such may be regarded as having an enabling role. This thesis proposes that while this view may have been correct in the past it is so no longer, and that technology is not following strategy but leading strategy in the food retailers examined. In order to confirm this thesis the history, technical development and technical structure of the three retailers was investigated. The results of this research was subsequently analysed and the following conclusions were made: a. Technology has a much greater inq)act on the strategy of multiple food retailers than has been previously thought. Technology defines the boundaries of operational activities, and, through controlling a substantial proportion of the information that managers use in the strategy making process, technology de fecto if not de jure greatly influences the retailers strategies, and in some cases may actually lead them. b. The food multiples, in not appreciating the extent to which their fete is tied iq) with the information technology they are using, are foilin g to educate and train the general management of the organisations technologically. c. Technological progress is widening the gap between the general management and technical management, and in the long run this will cause serious strategic problems unless this g ^ is closed through positive action. Acknowledgements I would like to begin by thanking the organisations who co-operated by supplying information. '\^thout this information this thesis could not have been conq>leted. I must also thank those individuals within the organisations vfoo agreed to be interviewed and vdio shared so much of their valuable time inq>arting insights that added greatly to my understanding of the multÿle retailing environmenL I thank my siq>ervisor Dr. John Hughes who has given enthusiastic support and guidance throughout the process of conq>leting my research and writing this thesis. His skilful help has made the journey seem shorter, his discussions inq)irational, his patience a monument to the best of academic traditions. My fomily deserve my thanks as they have been long suffering during the past five years. In particular I must thank my wife Pamela who has never conqilained when research and writing has interfered with femily activities. I also thank Mrs. Diane Hayes, Mr. Paul Brown and Mr. Ian Books of the Faculty of Management at University College Northanqiton whose support has been invaluable. Finally I thank all of those other people, too numerous to mention individually, ^ k> have contributed directly or indirectly to this thesis. Contents Page Abstract i Acknowledgements ii Contents iü Table of Contents iv Table of Figures ix Table of Tables xü III Table o f Contents Chapter 1 - Introduction to the Thesis and to the UK Retail Environment 1.1 General introduction 1 1.2 Nomenclature 5 1.3 The retailing environment 1980 - 1990 9 1.3.1 Retail concentration in the UK 10 1.3.2 Demographic and lifestyle changes in the UK 12 1.3.3 The distribution of stores 18 1.3.4 International activities and influences 20 1.4 Summary 25 Chapter 2 - Literature Review 2.1 Introduction 28 2.2 A review of the literature on strategy 28 2.2; 1 The evolution of strategic concepts 29 2.2.2 The background to retail strategies 42 2.2.3 Emerging food retail strategies 44 2.2.4 Searching for retail strategies 46 2.2.5 Retailing operational strategies 50 2.2.6 Summary 54 2.3 Food retailing technology and information systems 57 2.3.1 Technological issues 57 2.3.2 Technology and organisations 60 2.4 Performance measurement 82 2.5 Retail distribution systems 88 2.5.1 The development of retail distribution systems since 1850 - 88 IV 2.5.2 Distribution nomenclature 92 2.5.3 The development of the modem food multiple distribution 93 systems 2.6 General conclusions 115 Chapter 3 - Methodology 3.1 The q)proach to the investigation 117 3.2 The choice of organisations studied 120 3.3 The pilot study 122 3.4 The main research programme 125 3.5 Postscr^ 133 3.6 Summary 134 Chapter 4 - The Food Multiple Retailer Systems 4.1 Introduction 135 4.2 A system overview 135 4.3 Factors affecting food retail system design 137 4.4 An overview of a typical retail control system 137 4.5 System functionality 146 4.6 The merchandising system 148 4.7 Retail price management 157 4.8 Purchasing 161 4.9 Warehouse and distribution 163 4.10 Management reporting 167 4.11 Corporate management software 169 4.12 Conclusions 171 Chapter 5 - Sainsbury, Tesco and Safeway: Environment, Patterns of Evolution and Strategy 5.1 Introduction 177 5.2 Environment 177 5.3 Evolution 178 5.4 The future 185 5.5 Investment and patterns of evolution 186 5.6 The journey fiom the market stall to international food retailing 188 multiple 5.7 Change relationships 208 5.8 Conclusions 212 Chapter 6 - Performance Measurement, Emergent Operational Strategies and Core Competences 6.1 Introduction 215 6.2 The evolution of performance measurement systems 215 6.3 Operational strategies, core competences and strategy 233 6.4 Conclusions 238 Appendix 1 - Hardware and Software Configurations A1.1 Hardware and software architecture 257 Al.1.1 Communication systems 258 Al. 1.2 The UNIX software platform 264 Al. 1.3 Other software platforms 268 Al.1.4 Database systems 273 Al.1.5 The store hardware and software configuration 278 Al.1.6 The warehouse hardware and software configuration 284 VI Al.1.7 The Head OfBcehaidwaie and softwatecofiguration 286 Appendix 2 - Retailer Case Histories A2.1 Introduction 289 A2.2 J Sainsbury pic 290 A2.2.1 The early years 290 A2.2.2 1869-1880 290 A2.2.3 1880-1890 291 A2.2.41890-1900 292 A2.2.5 1900-1910 294 A 2 ^.6 1910-1920 295 A2.2.71920-1930 296 A2.2.81930-1940 297 A2.2.91940-1950 298 A2.2.101950-1960 299 A2.2.11 1960-1970 300 A2.2.121970-1980 301 A2.2.13 1980-1990 302 A2.3 Tesco pic 308 A2.3.1 The early years 308 A2.3.21930-1940 309 ' A2.3.3 1940-1950 309 A2.3.41950-1960 310 A2.3.51960-1970 311 A2.3.61970-1980 312 A2.3.7 1980-1990 313 A2.4 Safeway pic (Argyll Groig>) 316 VII A2.4.1 The early years 316 A2.4.2 Safeway 1962-1970 317 A2.4.3 Safeway 1970-1980 317 A2.4.4 Safeway/Argyll 1980-1994 317 A2.4.5 Argyll Group 1978-1980 318 A2.4.6 1981-1994 319 Bibliography 323 viii Table of Figures Fig. No. Title Page 1 r 1 Guy’s classification o f retail development 9 1.2 Percentage of grocery sales through muhÿles 10 1.3 Ençloyment and unemployment in the UK 1980-1994 15 1.4 The European Retail Alliance 24 2.1 The Boston Consulting Group Matrix 33 2.2 Strategic decision making profile 37 2.3 Growth patterns of Sainsbury, Tesco and Argyll 47 2.4 Ahemative methods of fillin g the planning gap 52 2.5 Relationship between market positioning, added value and (sub) 53 strategic decision areas 2.6 Types of management control system 66 2.7 Changing technologies and the ‘S’ curve 71 2.8 Traditional and BPR management structure conq)ared 74 2.9 The technology power loop 75 2.10 Througlq)ut volumes and technology relationships 77 2.11 Analysis of retail sales through marketing channels: 1938 and 1983 91 2.12 Supply chain terminology 93 2.13 Distribution system with and without depots 96 2.14 Stock Usage and reordering