Thus if the economy is not doing well then the consumers will not spend much. The firm will face decrease in the revenues. On the other hand if the economy is doing good then the consumers tend to spend more and thus the sales of the firm can increase.
It has been observed that when the economies of the country are doing good then the sales of the retail stores decreases.
Firm main market is UK and hence any slowdown in the UK economy will affect the sales of the firm and it has been observed in the recent past. During the 2008 subprime crisis which affected the economy of UK too and also the Euro zone crisis, the country has seen a slowdown in the economic growth and this also led to flat growth of the firm sales. Thus the firm is highly susceptible to the economic shocks to the country (Humphrey, Lee & Shen, 2012).
Social factors play important role in shaping the strategy of the firm. Since the firm caters to large number of customers it needs to keep the products which are being preferred by the people living in the locality. Sainsbury operates different stores in different parts of UK and other countries. However, the demographics, customer tastes and their choice may be different in the different regions where it operates and hence it cannot keep the same type of products in each store. It needs to keep products which are being preferred by the people living in the nearby area. For example, if the area has more working young population then it needs to keep more products preferred by that section of the society.
Thus the social factor helps in shaping the strategy of the firm and firm needs to decide on its business model based on the social structure of the society where it is operating its stores.