Simon English: Sainsbury's may be victim of its success if it starts looking like the local bully
Thursday 15 November 2012
Outlook There's not much doubt in Justin King's mind that he is a brilliant retailer and, to give credit where it is due, there's quite a lot of evidence for the case. Sainsbury's was a mess when he arrived as chief executive in 2004. Shelves were sometimes left empty and even fans of the business, those who thought Sainsbury's was a nice family firm and wanted to support it, decided to shop elsewhere.
That Mr King can claim to be grabbing such growth as there is going in a stymied market suggests he has more than a few skills in his field.
The strike against him is that he doesn't turn enough of a profit on his many billions of sales. He might say that just shows how keenly priced are his goods and how intense the competition.
A different worry now presents itself; might Sainsbury's become a victim of its own success?
By temperament Brits don't like businesses that get too big, that become ubiquitous. Headlines about bullying behaviour begin to appear.
An anecdote: across the street from where I live on Holloway Road in London is a nice corner shop that has been run forever by a lovely family. If you need milk at 10pm, that's where you go.
Sainsbury's is due to open a convenience store directly opposite the corner store and the family are understandably concerned for their livelihood.
The reason why this move looks unduly aggressive is that there is already a Sainsbury's 10 minutes' walk in either direction. There is plainly no crying need for another one.
Won't opening this store look rather obtrusive? Unseemly, even.
I ran all this by Mr King, and he was unrepentant. When he opens a new store somewhere, it brings greater footfall to the area, so good retailers thrive, he argues. A Sainsbury's over the road could be the best thing that ever happened to their business, he argues.
"Of course we are tough competition for anyone trying to sell the same thing as we sell. What we find is that traders in the general area of our shops are delighted that we have arrived," he told me, with typical optimism.
The thing is, there is no way my corner shop can compete with Sainsbury's on price, so it has to radically shift its offering, be something different. Until Mr King & co do arrive, it has no need to be anything other than what it is. When they do, the owners must turn their lives upside-down or, perhaps, starve, something that might induce bad feeling towards a company that wants us to like it.
Locals can vote with their feet, of course, but I just know that at some point I'll crack and go into the new Sainsbury's. From which point on, every pound I spend there will be grudging.
If Sainsbury's ends up just like Tesco, a place we go to because it's there, because it's convenient, Mr King will have lost something. There's more to life and to successful businesses than growth in any direction.
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