Self-service and heyday (1956–1991)
In 1956, Alan Sainsbury became chairman after the death of his father, John Benjamin Sainsbury. During the 1950s and 1960s, Sainsbury's was a keen early adopter of self-service supermarkets in the United Kingdom. On a trip to the United States, Alan Sainsbury realised the benefits of self-service shops and believed the future of Sainsbury's was self-service supermarkets of 10,000 sq ft (930 m2), with eventually the added bonus of a car park for extra convenience. The first self-service branch opened in Croydon in 1950.
Sainsbury's was a pioneer in the development of own-brand goods; the aim was to offer products that matched the quality of nationally branded goods but at a lower price. It expanded more cautiously than Tesco, shunning acquisitions, and it never offered trading stamps.
Until the company went public on 12 July 1973, as J Sainsbury plc, the company was wholly owned by the Sainsbury family. It was at the time the largest ever flotation on the London Stock Exchange; the company rewarded the smaller bids for shares in order to create as many shareholders as possible. A million shares were set aside for staff, which led to many staff members buying shares that shot up in value. Within one minute the list of applications was closed: £495 million had been offered for £14.5 million available shares. The Sainsbury family at the time retained 85% of the firm's shares.
Most of the senior positions were held by family members. John Davan Sainsbury (later Lord Sainsbury of Preston Candover), a member of the fourth generation of the founding family, took over the chairmanship from his uncle Sir Robert Sainsbury in 1969, who had been chairman for two years from 1967 following Alan Sainsbury's retirement.
Sainsbury's started to replace its 10,000 sq ft (930 m2) High Street shops with self-service supermarkets above 20,000 sq ft (1,900 m2), which were either in out of town locations or in regenerated town centres. Sainsbury's policy was to invest in uniform, well designed shops with a strong emphasis on quality; its slogan was "good food costs less at Sainsbury's". During the 1970s, the average size of Sainsbury's shops rose from 10,000 sq ft (930 m2) to around 18,000 sq ft (1,700 m2); the first edge of town shop, with 24,000 sq ft (2,200 m2) of selling space, was opened at Coldhams Lane in Cambridge in 1974. The last counter service branch closed in Peckham in 1982. To participate in the hypermarket sector, Sainsbury's formed a joint venture, known as SavaCentre, with British Home Stores. The first SavaCentre shop was opened in Washington, Tyne and Wear, in 1977; nearly half the space, amounting to some 35,000 sq ft (3,300 m2), was devoted to textiles, electrical goods and hardware. As the hypermarket format became more mainstream, with rivals such as Asda and Tesco launching ever larger shops, it was decided that a separate brand was no longer needed, and the shops were converted to the regular Sainsbury's superstore format in September 1999.
Sainsbury's diversified further in 1979, forming a joint venture with the Belgian retailer, GB-Inno-BM, to set up a chain of do-it-yourself shops under the Homebase name. Sainsbury's also trebled the size of its Homebase do it yourself business during 1996, by merging its business with Texas Homecare, which it acquired in January 1995 from Ladbroke for £290 million. Sainsbury's sold the Homebase chain in December 2000, in a twofold deal worth £969 million. Sales of the stores to Schroder Ventures generated £750 million and sale of 28 development sites, which had been earmarked for future Homebase shops, were sold for £219 million to rival B&Q's parent company, Kingfisher plc. During the 1980s, the company invested in new technology: the proportion of sales passing through EPOS scanning checkouts rose from 1% to 90%.
In November 1983, Sainsbury's purchased 21% of Shaw's Supermarkets, the second largest retailer of groceries in the northeastern United States (primarily in New England). In June 1987, Sainsbury's acquired the rest of the company.
In 1985, the chairman reported that over the preceding 10 years profits had grown from £15 million to more than £168 million, a compound annual rise of 30.4% – after allowing for inflation a real annual growth rate of 17.6%. In 1991, the Sainsbury's group boasted a twelve-year record of dividend increases, of 20% or more and earnings per share had risen by as much for nearly as long. Also in 1991, the company raised £489 million, in new equity to fund the expansion of superstores.
With the advent of out of town shopping complexes during the 1980s, Sainsbury's was one of the many big retail names to open new shops in such complexes – notably with its shop at the Meadowhall Shopping Centre, Sheffield (originally as a SavaCentre) in 1990, and the Merry Hill Shopping Centre at Brierley Hill in the West Midlands, which opened in September 1989.
Sainsbury's expanded into Scotland in 1992 with a shop in Darnley (the SavaCentre at Cameron Toll in Edinburgh had opened in 1984). In June 1995, Sainsbury's announced its intention to move into the Northern Ireland market, until that point dominated by local companies. Between December 1996 and December 1998, the company opened seven shops. Two others at Sprucefield, Lisburn, and Holywood Exchange, Belfast would not open until 2003, due to protracted legal challenges. While Sainsbury's outlets in Northern Ireland were all new developments, Tesco (apart from one Tesco Metro) instead purchased existing chains from Associated British Foods (see Tesco Ireland).
