ANALYSIS: Justin King crosses the finishing line, but what next for Sainsbury’s?
Formula 1 fan Justin King is leaving the supermarket, but the showman is game for another big race
Wednesday 29 January 2014
Justin King has left the building. Long live the king?
Most would agree that the job he pulled off at Sainsbury’s will no doubt make its way into business textbooks the world over; he turned around a struggling company, destined for a slow, painful demise, and brought it back to life, rejuvenating a tired brand.
The 52-year-old triathlete joined the supermarket in 2004 just as the business lost its position as the number two supermarket to Asda, followed swiftly by three profit warnings and the resignation of its chairman.
Tesco’s Clubcard meant customers deserted in droves, while Sainsbury’s poor imitation (at that time) the Nectar card, was a long way from successful.
However, with a mixture of panache and common sense, Mr King managed to claw back the business, revamping stores, building up its non-food business and creatingthe only viable competitor to Tesco in convenience stores.
Some argue the former Asda man’s gains were down to Tesco’s failures, as overseas expansion became the larger rival’s biggest interest, but Mr King also managed to take full advantage of the disasters.
He was well-liked by the City for his seemingly straight talking and smooth style of management. Many have said he could have a career in politics, with his facility for sound bites and answering questions that may not even have been asked. Supremely confident and in love with the limelight, he was unapologetic about his £3m pay packet, believing he was worth every penny (if not more).
He played a leading role in encouraging the Government to tackle business rates and tax avoidance by some of the biggest international retailers – even showing off a copy of a corporation tax return form to a room full of retailers “in case they didn’t know what one looked like”.
However, one question that was constantly raised in the past few years was over his future.
With Mr King’s love of politics – he was a business adviser to David Cameron before leaving for being too vocal – many wondered if he wanted to move on after 10 years, much like Tony Blair.
He always avoided answering, quipping that William Morrison ran his supermarkets for 40 years, that he had lots of energy and that all his focus was on the job at hand.
Now that he has confirmed his departure, what next?
The initial rumours suggest he could be lined up to take over the helm at Marks & Spencer, should under pressure chief executive Marc Bolland get the boot. A move back to the retailer would mark a triumphant return to the company he was poached from in 2004 when director of food.
However, Mr King made it clear his Sainsbury’s contract states he is not allowed to work for a rival for at least 12 months after leaving.
A keen petrol head, speculation has also circulated that he had been approached by Formula One boss Bernie Ecclestone – his son Jordan already races and is tipped as a future Formula One star (his proud father follows his races most weekends).
Again, Mr King refused to deny the speculation, with some believing he would love the chance to run F1, whether he had been approached or not.
Political parties will also no doubt be knocking down his door, and a peerage would not be unexpected; others suggest his love of sport could see him take on a Seb Coe role, after Mr King personally signed up Sainsbury’s to the Paralympics as its sole sponsor.
Whatever he chooses to do, it will need to be fast-paced and full on, because a nine-to-five man he is not.
But what of his successor Mike Coupe? He has already made it clear that he wants to follow in Mr King’s footsteps, which is unsurprising considering the two have worked together for 10 years at Sainsbury’s and were colleagues at Asda in the 1990s.
Mr Coupe also had an ill-fated stint as managing director of Iceland, introducing organic produce to the business at a time when upmarket rivals were barely stocking it, yet alone discount competitors.
The mild-mannered 53-year-old has spent the last 12 months finding his voice and took a lead role in fronting campaigns for the business, especially since the horsemeat scandal.
He has spoken out for Sainsbury’s in its campaign against the Advertising Standards Authority and Tesco over the bigger rival’s price promise, which is now going to judicial review. He has increasingly been hosting meetings and awards for the business, being allowed to take some focus away from Mr King.
Currently commercial director, Mr Coupe is said to be well respected throughout the supply chain and has intimate knowledge of merchandising and trading.
He will have his work cut out, because, with deft timing, Mr King has announced his resignation as a 36-quarter run of like-for-like growth is coming to an end. But if he can pull off the same tricks as Mr King, he will earn an equally glowing reputation.
King’s reign: Ten years at the top
March 2004 Justin King becomes chief executive of Sainsbury’s.
April 2004 Completes sale of Shaw’s Supermarkets, a US business.
June 2004 Revolt over bonus scheme; Philip Hampton takes over as chairman.
October 2004 After third profit warning of the year, launches ‘Making Sainsbury’s Great Again.’
March 2005 Posts first of 36 consecutive quarters of sales growth.
September 2005 Launches ‘Try Something New Today’ campaign, with Jamie Oliver.
July 2007 Qatari-backed fund Delta Two makes takeover approach.
September 2010 Taste the Difference range relaunched.
July 2011 Parts company with Jamie Oliver.
September 2011 New ‘Live Well for Less’ adverts.
November 2011 Opens its 1,000th UK store, in Ayrshire.
2012 Sponsors Paralympics.
January 2013 One of the few supermarkets unaffected by horsemeat scandal.
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