The King has left the building: examining Justin King's Sainsbury's legacy
As Sainsbury's charismatic leader Justin King announces he is stepping down in July, Rachel Barnes takes a look back to the start of his reign and the legacy he leaves.
Justin King to leave Sainsbury's in July
The most unsurprising business story of the year still had me spluttering when it was released to the City this morning at 9.06am.
Justin King is leaving Sainsbury’s after a decade at the helm, handing over control to Mike Coupe, group commercial director, who joined just after King in 2004.
Trouble at Sainsbury's
Sainsbury’s might be the darling of retail in 2014, or at the least of the supermarket world, but turn back the clocks to January 1, 2005, and it was a different story.
Its third quarter results came out that day, revealing a 1.2% decline in like-for-likes, compounding its struggles after three profits warnings the year before.
However, King’s then three-year turnaround plan to "make Sainsbury’s great again" was already in action. From that point, Sainsbury’s has not made another loss – although it came close this Christmas.
As an eager reporter, King once had to stop me as I tried to ask "one more question" as he needed to head off to the toilet
As a retail reporter back in 2004, I followed the Sainsbury’s story with the enthusiasm of youth, eagerly grabbing King at the end of press conferences to ask him about the marketing plans. One time he – or rather his PR minders - even had to stop me as I followed him down the corridor to ask "one more question" as he needed to head off to the toilet.
Justin King was far from ever being a caretaker chief executive; his remit was change. He made his mark from the outset, setting out plans to cut £400m costs, including a £40m cut to marketing and losing 70 marketers from the then-300-strong department.
Getting the basics right
His strategy was about simplicity, but his "Getting the basics right" plan was deeply complex, from range rationalisation across all the aisles to calling time on a £3bn IT and logistics overhaul flop.
He put the focus back on its premium range, Taste The Difference, in an effort to re-establish the quality credentials of Sainsbury’s. It also relaunched its organic and Be Good To Yourself ranges as it looked to win back shoppers.
I don't know why Waitrose or Marks & Spencer should be a benchmark when we could beat them
In 2004, he was clear where Sainsbury’s needed to be when he said: "We're better than Tesco and Asda on quality, and I don't know why Waitrose or Marks & Spencer should be a benchmark when we could beat them."
This has formed the bedrock of Sainsbury’s strategy in the past decade, and is was this that led to growth seen in the past 36 consecutive quarters.
The question on everyone’s lips back in 2004 was also about whether Jamie Oliver would be dropped as the face of the brand. In honesty, most commentators probably believed the ubiquitous chef was out.
However, King chose to re-sign Oliver, coinciding with the chef’s mission to make Britain healthy and his new School Dinners campaigning stance. It was one of the best decisions ever made and helped put Sainsbury’s front of mind for consumer’s when it came to quality, healthy food.
It was at this point in 2005 that Sainsbury’s also ditched "Making life taste better" – often referred to in national headlines as "Making life taste bitter" – bringing in "Try something new today".
A decade of growth
While the pace of change has been rapid and continuous in the past decade, it was these changes brought in a decade ago which are the reasons Sainsbury’s is succeeding today while rivals flag.
Under King, turnover has grown 67% since 2003/04 to an estimated £24.1bn for 2013/14, according to IGD. Operating profits have grown 59% to £829m.
Meanwhile it has successfully pushed into convenience – an area where Asda and Morrisons have failed to move fast enough – with store numbers up 354%, growing from 136 back in 2004 to 618 today. Supermarket numbers are now up to 595, from 447 a decade ago.
Mike Coupe has been at the boss’ side for a decade, so he will be viewed as 'safe hands'
When Sir Terry Leahy handed over Tesco’s leadership to Philip Clarke in 2011, the early warning signs of struggling UK trading were already visible.
While Christmas trading was a struggle for Sainsbury’s, it’s hard to believe that King’s exit will prove as much of a nightmare for incoming boss Mike Coupe. Like Clarke, Coupe has been at the boss’ side for a decade, so "safe hands" is how he will be viewed.
However, while Sainsbury’s is not crying out for the massive change that it needed back in 2004, it needs a strong leader to more than simply fill a gap left by the charismatic King. It's one of the best jobs in retail, but, arguably, it is unenviable to follow in King's big footsteps.
This article was first published on marketingmagazine.co.uk
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