What’s hurtful, says Justin King, is that people are amazed his supermarket
chain is doing well at all. But it’s not luck, he continues, that produced
last week’s impressive interim results at J Sainsbury. It’s getting the
right goods at the right price onto the right shelves. You could call it the
ketchup effect.
“Our own label is as good as, if not better than, the leading brand, and 20%
cheaper. So our tomato ketchup has 40% more tomatoes, 60% less salt, 30%
less sugar and is nearly half the price of the leading brand . . .”
King sees I am about to interrupt this litany of facts and holds up a hand:
“Don’t stop me now, I have to do this . . . and consequently our ketchup
sales have gone up 140% year on year as a result - 140%,” he repeats, and
then grins.
Far from being hurt, King is loving it. He is four years into his turnround of
Sainsbury and he continues to surprise analysts and rivals with the strength
of his supermarket chain’s performance. As Britain slides into recession,
many thought Sainsbury would suffer. Upmarket rivals Waitrose and Marks &
Spencer are already feeling the strain.
Yet it hasn’t happened. Sainsbury’s results for the half-year to October 4,
announced last Wednesday, show sales up 7.6% to £10.7 billion and
like-for-like sales growth of 3.9%, giving it a better performance than
Tesco, Britain’s biggest supermarket chain. King says that is on the back of
a surge in demand for Sainsbury’s improved own-label products, as customers
looking for value trade down.
And how do we know his sales haven’t fallen off a cliff since October 4?
“I’m not allowed to comment,” he says, “but fortuitously, the research firm
TNS released figures this week that showed somewhat surprisingly” - he
mock-sighs again - “Sainsbury continued to do well in a market dominated by
price. If anything it shows our performance is a little bit stronger since
October.”
So King, 47, has every reason to be chipper. In fact, he looks both elated and
exhausted, after a long day briefing staff and media. His suit is still
buttoned up, his boyish hair slicked back, his wife waiting in their Lexus
hybrid outside - he has promised her dinner - but part of him can’t stop
running through those facts.
Yes, discount supermarkets Aldi and Lidl are showing the fastest growth, but
they are building more outlets, and they don’t release like-for-like
figures. His Basics range of own-label products is cheaper than their goods
anyway. And maybe Asda and Morrisons have an advantage in hard times, but at
Sainsbury they have a plan.
“We set out four years ago to build a supermarket with universal appeal. We
want you to do whatever shopping you want with us, so we sharpened price
position, in-store availability and service - we wanted to be best quality
and fantastic on price.
“But the launch of our ‘Switch and Save’ promotion in own-label goods was a
year in the planning. You can’t change your top 200 lines and make them
better overnight. We knew tougher times were coming and our strength was in
own-label - customers trust our label more than others. If you need to save
money as a consumer, switching to Sainsbury’s own label is the best way to
do that.”
King is in his element. Stockily built, a Brummie by birth, he has rejuvenated
Sainsbury since he joined in 2004. Three years ago the supermarket chain
reported a half-year loss, and last year it was unsteadied by takeover
speculation, yet here it is now, garnering the plaudits.
And all this at a time when some of his senior team might have been very
distracted. Last year’s takeover bid by its biggest shareholder, the Qatari
government’s wealth fund, would have made many of them millionaires. Then it
fell through last November.
In King’s case, he would have pocketed a £40m incentive package had the
Qataris taken Sainsbury private. Is he not grumpy he missed out?
“Do I look grumpy?” he beams. In truth, it would be hard to tell, as King is
so determinedly positive about everything - some would say overly
self-assured. Sir Philip Hampton, Sainsbury’s chairman, laughs and describes
King’s upbeat style thus: “Justin’s not just glass half-full, he’s usually
up to the brim.” But confidence is vital in management. It pulled Sainsbury
out of a sticky patch last Christmas when performance slipped against bigger
rivals Tesco and Asda. Hampton acknowledges there was a blip after the
takeover stalled. “It did impact on our performance for a little while.”
King, meanwhile, has returned to doing what he does best: getting into the
supermarket aisles, and putting himself about.
He calls it reconnecting with customers - “Asking them what we have been doing
wrong and what we have to do to put it right.”
But aren’t consumers overreacting right now? Despite the feeling of gloom
about the future, most haven’t lost their jobs - but there is a sense that
many are already planning for the worst.
“Yeah, sentiment is as downbeat as it has been for 10 years and way ahead of
where customers actually are. We do have a unique attribute in this country
of focusing on the negative, and some retailers are suffering and have used
the economy as an excuse, but it’s not as bad as some people seem to think.
“However, their behaviour reflects their feelings. So if you look at our ‘Feed
your family for a fiver’ promotion, we could see customers were doing more
cooking themselves, buying our own-label Basics range . . .”
King is so pumped up that it’s hard to stop any conversation slipping into a
sales pitch. He stresses the importance of Fair Trade and organic - he
doesn’t think customers will ditch those - high husbandry meat, no
artificial additives, sustainable sourcing of fish, sustainable palm oil.
“Importantly, we have kept our brand values in Basics - our customers told us
they had to have those things. When you buy at discounters you don’t get
them.”
King, the son of a salesman, is good at the patter. Colleagues describe him as
a gifted team player who “doesn’t mind a bit of limelight and is orientated
more towards sales than costs”, according to one.
He also has a 360-degree vision of retail, not surprising given his early
stints at Mars, Pepsi, Grand Met and Asda. And as the eldest of four
brothers, he combines a serious sense of purpose with a fiercely competitive
streak.
That can make him nakedly ambitious, which occasionally puts outsiders off.
There has been speculation that he will succeed Sir Stuart Rose at M&S –
he headed M&S Food from 2001 to 2004. King is not the type to dismiss it
out of hand.
But he is so wrapped up in rebuilding Sainsbury that it’s hard to push that
point. Does he have the experience to guide his business through recession?
“I think you will find I have worked through three technical recessions. I am
a 25-year veteran, though obviously that’s hard to believe.” He laughs.
“But you can’t compare this recession to others – the banking crisis is new
and it’s a long time since we have entered a recession with inflation. It’s
a different dynamic. Customers are much more sensitive to inflation than
recession.”
But it also offers opportunity. King has a sales target of £20 billion in his
sights and he can see more potential in Sainsbury’s nonfood lines – 15% of
business so far, a third of growth in sales.
“We are now the ninth-biggest clothing business in the UK, from a three-year
start. Who’d have thought it?”
Stand-alone non-food stores? “No, always complementary: you come to Sainsbury
first for the food.”
And the possibility of takeover now that share prices are low? The Qataris
still have 27% of Sainsbury. He shrugs: “They have actually written to tell
us we can say they are very happy with their investment and supportive of
management.”
And others? “We are no less vulnerable than anyone, but the world has changed.
Easy money fuelled takeover activity - it’s not there any more.”
Then there’s the ongoing threat from competition authorities - they’ve
recommended an ombudsman be appointed to oversee the relationship between
supermarkets and their suppliers. King shakes his head. “P&G, Mars
and Unilever don’t need any protection.” What about smaller suppliers? “My
director of trading is bonused on suppliers telling us relationships are
good. We’re proud of that.”
So he still has to keep the team focused, keep trading well, keep confidence
high. Does that make him the Harry Redknapp of retailing, simply telling his
players to get back to basics and “just f***ing run around a bit”?
For a second you can see King doesn’t like this analogy at all, but then he
laughs. “I hope it’s not just that,” he says smoothly and adds “gotta go”,
gesturing at the waiting car outside. He really is irrepressible.
The life of Justin King
VITAL STATISTICS
Born: May 17, 1961
Marital status: married, with two children
School: Tudor Grange grammar, Solihull
University: Bath
First job: production shift manager, Galaxy chocolate
Salary package: £1.9m including bonus
Homes: Warwickshire and London
Car: black Lexus hybrid
Favourite book: Gung Ho! Turn On The People In Any Organisation, by Ken
Blanchard and Sheldon Bowles
Favourite music: The Clash - ‘I’m having a bit of a Clash revival at home’
Favourite gadget: Lexus hybrid
Favourite film: Blade Runner
Last holiday: Somerset
WORKING DAY
THE J Sainsbury chief executive wakes at his home in Leamington Spa,
Warwickshire, at 5.30am. Justin King is picked up at 6. He spends the
two-hour journey into his London office reading and signing letters.
“My working day is all meetings - staff, directors and board.” Eight
executives report directly to King. “I’d describe my style as top and
bottom. Create the strategy and exert energy finding out what is going on at
the face of the business.” He visits stores on Fridays, and every quarter
meets all his store managers in groups of 30 around the country.
In the evening he will often entertain suppliers at the Bleeding Heart
restaurant near his office and stay in town at his apartment in Bloomsbury.
DOWNTIME
JUSTIN KING relaxes by spending time with his family. “I’ve recently helped my
daughter pass her driving test – and, no, I didn’t just pay for the lessons,
I sat in the car teaching her.” He also follows his teenage son’s passion
for go-karting. “He’s doing that all over Europe now. That keeps me busy.”
He loves to sail, and has four dinghies kept at Hayling Island. “But I don’t
get much time for it now, so I’ve lent them all to my brothers and their
families.” The biggest is less than 6m long. “No, I couldn’t entertain many
suppliers on my boats, and if they did come, they’d get very wet.”
