Justin King leaves Sainsbury’s – remembering his achievements

Recently Justin King, CEO of Sainsbury’s, the UK’s second largest grocery retailer, announced he will stand down in the summer after 10 years in the role.

justin k SainsburyI worked with King when I was a young manager at Mars Confectionery and he was an even younger graduate trainee. We were friends for a while – played golf once or twice even – but we both left around the same time, and I’ve only seen him a couple of times in 20 years or so. He was known at Mars for his enthusiasm, bounciness and inter-personal skills – he was somewhat ‘puppy-like’ in his younger days perhaps! After Mars, he worked at PepsiCo, Asda, and Marks & Spencer’s, before turning up in the top job at Sainsbury’s.

Not many remember quite what a state the supermarket group was in when he took over in March 2004. And he was only 42 years old, without any plc board-level experience. The very fact that he got the job – he wasn’t even on the M&S Executive Board when he was appointed, and the media were distinctly underwhelmed by the choice – was seen by many as an indication that Sainsbury's was already in a death spiral.

They had lost the number one position in terms of market share to fierce rivals Tesco. The previous MD, Sir Peter Davis, was a respected senior businessman and City figure with a string of board appointments behind him, but he had notably failed at Sainsbury’s. He was moved upstairs as Chairman when King was appointed, but then left after a dispute over his bonus, souring the press and investor view of the firm even further. Indeed, the outlook was so gloomy that in April 2004, the Guardian newspaper published an article titled; “Is running Sainsbury’s the worst job in Britain”?

And King’s first major interview, a few months into the job, didn’t go down that well, I remember, because he didn’t really seem to have any great new strategy for the business. No impressive McKinsey consultancy report to share (Davies was noted for his love of using consultants).  King just had a few simple messages. “We’ve got a few things wrong that we need to put right,” was his line.

Number one was price competitiveness, not to be the cheapest but to be close to Tesco and Asda, the big rivals. Then, he said, we have to make sure stock is on the shelves when customers want to buy it. To that point, he took decisive action and scrapped a major supply chain computer system that was giving them problems. Then he  pulled out of a much broader IT outsource with Accenture in 2005 (I happened to see that contract, unofficially, and let’s just say I think he did the right thing. It had been ‘negotiated on the golf course’ was the rumour at the time).

Finally, he said, the staff are de-motivated, mainly because of points one and two. So he applied some of the ideas he had gained from his time at Mars and Asda around staff motivation -  getting top managers back on the shop floor regularly for instance.

Despite the lack of apparent brilliance, the new approach worked! The recovery started within months, market share grew, and while Sainsbury’s have never recovered the number one slot, they’re a strong, healthy company. Much of that is down to King and his approach. Another point for which he deserves considerable credit was the key appointments he made, bringing in some very smart people from competitor firms. And now, ten years on, it is Tesco whose strategy is under question from the investor community right now.

So, what can we take from this? Well, it is worth remembering that getting the basics right goes a long way in most businesses. And of course supply chain management in retail, as in many other businesses, is right up there as a fundamental and critical success factor. I was telling the manager at my local Waitrose the other day, if they continued being out of stock on Broccoli so often, then Sainsbury’s would be getting an even higher proportion of our family’s total supermarket spend!

Well done to King anyway, and we just wanted to congratulate him really on everything he has achieved, and wish him good luck and success in whatever he does next. He is one of the good guys.

 

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