Justin King could talk for England. Still beaming after his first appearance
with Jeremy Paxman on Newsnight - “I should have taken him some of our
pants!” - the J Sainsbury chief executive rattles through the next 90
minutes like a politician on the election trail.
He jumps from how the Chancellor has got it badly wrong on plastic bags to how
supermarkets should stand up for themselves, how he believes that his best
years are ahead of him and how Sainsbury's has such a rich heritage that it
inspired the Government's ration-book scheme in the Second World War.
Moreover, he says, Sainsbury's should be classed as Britain's second-biggest
supermarket chain, not Asda: “If you look at their filed accounts, you will
miraculously see that my turnover is greater than theirs. The market
definition that is used excludes petrol, where we outperform.”
It is hard to remember that six months ago popular opinion had it that Mr King
was desperate to call it a day and take the money when the Qatari Investment
Authority (QIA) mooted a £10.6 billion takeover bid. He straightens his tie,
grins and asks: “Do I look like a man who's fed up with his lot?”
The prospect of a £7 million bonus this summer has, no doubt, brightened his
horizons, yet Mr King has also achieved what many thought impossible when he
joined the old lady of the supermarket sector four years ago. He has brought
Sainsbury's back to life.
Many thought that, if not bored, Mr King had lost his mind when he left his
job as head of food at Marks & Spencer to try to revive the supermarket
group.
At the time Sainsbury's had lost market share for 14 years in a row, while
Tesco had disappeared into the distance after stealing its crown as the
biggest grocer in town in the mid-1990s.
Mr King's ambitious turnaround plan - Making Sainsbury's Great Again - was
dismissed as fanciful when he unveiled it in 2005. Three years on and the
chief executive believes that he has done more than enough to prove the
doubters wrong.
Sainsbury's has achieved 13 successive quarters of like-for-like sales growth,
it has generated an extra £2.7 billion of sales, beating its target of £2.5
billion, and has doubled profits to nearly £500 million.
Sainsbury's has even managed to lure Dido Harding, one of Tesco's rising
stars, to run its convenience stores business. She started work this month
and is already teaching Sainsbury's how its long-term rival would have
approached certain problems.
Mr King says: “People said Sainsbury's was a busted flush. There was a sense
the industry had moved on and left Sainsbury's behind and that its lot was
to be a laggard.
“What sticks out in my mind was one comment that: They won't do it, but if
they do they will have done a bloody good job.' We are very pleased to be
here three years down the line, saying we did not just do it, but we did a
bit better.
“Our core belief was that the brand was not broken and that what we stood for,
great products at fair prices, was as relevant as at any time in our
history. We had just been failing to execute.”
The achievement has emboldened Mr King to speak out far more on issues
affecting the whole sector, not least the environment and government
regulation.
His appearance on Newsnight centred around Sainsbury's criticism of Alistair
Darling's proposed levy on plastic bags.
Sainsbury's has cut the number that it hands out to customers by 40 per cent
over the past year and Mr King argues that the Chancellor's confrontational
style makes a mockery of all the good work achieved by the industry, the
Department for Environment, Food and Rural Affairs (Defra) and WRAP, the
not-for-profit environmental organisation, on the issue.
Although speaking before last Thursday's visits by the Office of Fair Trading,
he adds that supermarkets seem too often to be targeted by government and
watchdogs because it is the easiest option.
Citing the mounting concern over under-age binge drinking, he says: “From all
the evidence, it seems that in the vast majority of cases people who are
over the age buy the alcohol and then give it to juveniles.
“The Government should look at why adults think it's appropriate to do this
and break the law, but instead it becomes an issue about cheap beer in
supermarkets.
“If you had to lie back and accept it, it would be frustrating, but we are
great believers that we should be prepared to stand up and defend what we
do.”
Mr King believes that, while the Competition Commission inquiry into
supermarkets could help to curb Tesco's dominance, via a fairer planning
regime, the first line of the commission's provisional findings in February
highlighted how competitive the grocery sector is. Indeed, this competition
is likely to intensify as Mr King launches Sainsbury's next three-year plan.
He wants to generate an extra £3.5 billion of sales and has vowed to take on
Tesco and Asda at their own game by expanding far more into non-food sales.
Last week Sainsbury's announced the launch of a cut-price homewares range.
More than 1,700 products - from bathroom fittings to kitchen implements -
will be introduced to stores, if a trial proves successful. Around 70percent
of the range will cost less than £10.
Mr King admits that Sainsbury's has considerable work to do to catch its
rivals on non-food products, but he points to the success of Tu, his group's
£300 million clothing range, as proof that Sainsbury's is on the right path.
He insists that Sainsbury's has also proved that it can poach customers from
its rivals and other high street chains - if the offer is right. The
supermarket sold a Sony Bravia flatscreen television every five seconds at
the height of a Christmas and new year promotion.
Mr King says: “My starting point on this is that we already have 17million
people doing us the great honour of shopping with us every week, so we have
an opportunity to sell them something beyond what was on their shopping list
when they come in.
“The other side is that people may come to us because of a certain offer. The
nice thing about that is that if they come from a competitor, they might
actually discover that food can taste a bit better and stay shopping with
us.”
Mr King is equally as bullish when it comes to the threat posed by Waitrose,
the John Lewis-owned supermarket chain that many feel has surpassed
Sainsbury's as the home of high-quality food.
While he admits that Waitrose is doing what he called “some fantastic things”,
Mr King counters by stating that Sainsbury's is doing the same, on a much
bigger scale. “We are five times the size,” he says, “and what we are
delivering is affordable prices. It's universal appeal.
“When I joined, there was this strategic conundrum. People were saying
Sainsbury's is in the middle of Waitrose and M&S focusing on quality and
Tesco and Asda focusing on price - what are you going to do about it?
“We said we think the middle is the place to be. Now people are talking about
others moving into the middle and asking how are you going to protect your
ground? How's that for a transformation? We've gone from being in the place
where no one wants to be to the place where everyone wants to be.”
The key, Mr King points out, is that Sainsbury's is looking forward and no
longer mourning Tesco's success.
“The lines between Tesco and Sainsbury's crossed in the 1990s, but when I
joined the disappointment was still palpable. People feared for Sainsbury's
future. Now people are excited about the future. Our starting point is
today.”
The leader questioned
If you could change one thing in the financial and commercial environment,
what would it be?
Restoration of confidence in the banking system. The lack of liquidity, if it
continues, will impact business prosperity long into the future.
Who is or was your mentor?
There have been many. I have tried to learn from every boss I have had. They
all taught me something, mostly good, occasionally bad.
Does money motivate you?
It is not a major focus, but that is easy to say when you are well off. The
opportunities it allows me to provide for my family are what makes it
worthwhile.
What is the most important event to happen in your working life?
Switching from being a supplier to a retailer when I joined Asda - having
previously worked for Mars Pepsi and Häagen-Dazs in 1994.
What gadget must you have?
I am not into gadgets, really, but have become a bit of a bore about the
technology behind my Hybrid Lexus company car.
What does leadership mean to you?
It’s about creating the right environment, where people can fulfil their
potential; creating a clear vision and sense of purpose and excitement about
what might be achieved.
Which business person do you most admire?
I recently met Freddie Hirsch who worked with Ray Ackerman in creating Pick n
Pay in South Africa. He’s in his 70s and still active in many businesses and
passionate about his country. I hope I’m still going as strong in 25 years’
time.
How do you relax?
Time with family and friends is my key to relaxing.
CV
Born: May 17, 1961, Stepney, East London
Education: Tudor Grange Grammar School, Solihull; Solihull Sixth-Form
College; Bath University
Career: 1983: joined Mars as graduate trainee; 1989:
joined Pepsi to work in the Middle East and Egypt; 1990: joined
Häagen-Dazs, where he became managing director of the UK business; 1993:
joined Asda, where he held a number of senior positions; 2000: appointed
chief executive of Marks and Spencer's food division; 2004: joined J
Sainsbury as chief executive
Family: married with two children
