Sainsbury's distribution system was cutting edge at the time.
Sainsbury's lost market share mainly for two reasons: they built fewer stores than Tesco, and they tried to compete on price when their core market were people that thought they were paying for quality produce.
Once the slide started, they reduced staffing in stores, and removed the store manager's control over the "differentiators" he sold, so that those customers that they had left got pissed off at the sudden lack of service and increase in empty shelves, and also went elsewhere because that item they used to always buy was no longer available, because the store they shopped in no longer sold it.
If you shopped in an 'up market' Sainsbury's in the mid-late 90s that was designated a 'value' store by head office, or vice versa, it was painfully obvious, and you stopped shopping there. Crucially, they didn't attract new customers to replace those they lost.
The funny thing was that at the time, if you spoke to anyone that worked at Blackfriars, they would tell you it was a dumb thing to do, but the board (or rather, the board's underlings) had hired a bunch of consultants...
Pretty much the same thing (hire know-nothing consultants) that M&S did a few years later much to the businesses detriment.
Pretty much the same thing the Blair government did too, now I think about it.