'Run-down' Sainsbury's seeks smarter home

Sir Peter Davis, the chief executive of J Sainsbury, has described the supermarket group he inherited as a "run-down boarding house" needing a complete overhaul.

He also said there was no point in attempting to take on "modern hotels" such as Tesco and Asda while Sainsbury's was still having a "heart and lung transplant".

Speaking at a food retail conference in Madrid, Sir Peter said: "I was given a run-down boarding house to look after. It was a 135-year-old boarding house, was proud of its past and it had been overtaken by modern hotels. It needed a new roof, new kitchen, new plumbing and still had to take guests in every night. The alternative is two smart motels down the road, one called Tesco and one called Asda."

His remarks echo comments made two years ago by Sainsbury's then marketing director, Sara Weller, who referred to Tesco as "the pre-eminent retailer in Britain, bar none". Ms Weller was reprimanded after her gaffe but has since been forgiven and is now deputy managing director of the stores group.

Sir Peter said that Sainsbury's would mount an effort to win more market share from Tesco and Asda but not until it was in a better competitive shape. "We will take Asda and Tesco on at their own game, but with one arm tied behind our back, when we're having a heart and lung transplant, is not the time to pick a fight," he said. Sainsbury's is undertaking a huge overhaul of its 535-strong chain of stores with new product lines including a big expansion of non-food ranges. Around 80 stores will have dedicated non-food areas by the end of this year stocking homewares and a new "cookshop" range, followed by clothing and children's products next year.

A further 220 stores will be selling new non-food products in their existing floor space while a new health and beauty range of goods will be stocked in 80 stores. Sainsbury's has recruited 17 non-food specialists from rivals such as Marks & Spencer and the French retailer Carrefour to oversee the transformation.