The MT Interview: Justin King

Youthful, vigorous and self-assured, Sainsbury's CEO has made a difference to the sickly supermarket chain after just a year in the seat: strong leadership, better staff morale, even grudging approval from the City. Everything flows, he says, from what customers find on the shelves.

by Chris Blackhurst
Last Updated: 31 Aug 2010

A dramatic change is taking place at the top of British business. Out has gone a generation brought up amid post-war abstemiousness and deprivation, that can remember National Service and sets great store by breeding and class. In has come the forty-somethings, brasher and louder, as younger people often are, and not wedded to the prejudices and snobberies of their predecessors.

The toffs are being replaced by the classless. The public school is giving away to the grammar and the comprehensive. Urbane patriarchs are conceding to edgy, can-do upstarts. The heavy pinstripe is consigned to the wardrobe; new managers wear plain two-piece suits and light shirts with buttoned cuffs. Sometimes they wear a tie, sometimes they don't - it depends on how they feel. They don't have titles like 'Mr', 'Sir' or 'Lord'. They're on first-name terms with everyone. So it's Terry in charge of Tesco, Richard at Boots, and Allan and Adam at the Post Office.

If one member of the new establishment epitomises their ascendancy it's Justin at Sainsbury's. There's something about the way King replaced everyone's jolly uncle, Sir Peter Davis, as chief executive. Then there's the fact that he has taken over at a firm still tied to the founding family, with their aristocratic mien and wealth.

It's also, though, the nature of King himself. Impossibly young-looking and brimming with self-confidence and exuberance, he could easily pass for a former Blue Peter presenter or a football player-turned-TV pundit.

He doesn't just walk into a room, he strides. The resemblance between King and an upbeat Tony Blair or, better still, Alan Milburn (to whom he displays a remarkable likeness), marching onto the podium is uncanny.

Everyone calls him Justin (it wouldn't do if everyone called him King).

One of his first acts on becoming CEO was to implore staff around the supermarket's branches to 'tell Justin' of their ideas and problems - the sort of move that causes the old guard to wrinkle their noses: a bit touchy-feely and far too matey for their liking.

King would make an excellent politician. We've met a few times and, within seconds, he's asking me how my son is getting on in his Saturday job at our local Sainsbury's. It's a nice gesture - King has remembered and is genuinely concerned. When I tell him he no longer works there, King wants to know why. The Sainsbury's boss would be great on the electoral stump, knocking on doors, wandering into shops.

Which, I suppose, helps explain why he has got where he is. One of the requirements of the new wave of business leader is to be Everyman, to be one of the workers when it suits, to talk numbers with the City, to deal with the media and Westminster. King has this gift in spades.

Likewise, it's no use a 21st-century retailer sitting in a glass tower in the centre of London. They have to get out, tour branches, visit competitors, and even do stints sitting at the tills or stacking shelves or working in the warehouse. At weekends, they're expected to shop at the stores they run, to be among their staff and customers. King does all these things.

He tells how his 11-year-old badgered him, on the Saturday just gone, in their local Sainsbury's to collect more Active Kids vouchers (a schools promotion that Sainsbury's is running); how every Friday he goes to stores and suppliers; how he packed carrier bags in the Camden shop for Comic Relief; how he manned a checkout in the Christmas rush; and how, like all his senior team, he has 'adopted' a store to get closer to staff and understand the issues they face, so they can call him direct if there's anything they need help with. It's all good, levelling stuff - although, it must be said, not unique to Sainsbury's. Yet you just know King does it very well indeed.

When we meet on this occasion, he's been in charge for exactly a year.

First impressions count - and there is a buzz about the place in the new Holborn Circus HQ (formerly the head office of Robert Maxwell's Mirror) in central London quite unlike the atmosphere in the old building down the road in Blackfriars. There, visitors were greeted by the sight of chauffeured limousines waiting to bear one of the senior members of the Sainsbury family away. Here, there are no flash cars to be seen, no feeling of 'them' and 'us'.

The new premises ooze cool sophistication. Guests help themselves to coffee or fruit juices. They can sit and watch the flat screens before being ushered through the electronic barriers - more airline executive club lounge than the base of a venerated purveyor of food and drink.

As a thoroughly modern egalitarian, King has his office not at the top but in the middle, on the third floor. It's small and functional, in the corner of the building, light and airy with glass on two sides. He's a New Man, so the pictures on the shelves show him with his family, not with the great and the good. A proudly displayed certificate is from the Finsbury branch, having a laugh at his expense, not from an ancient university.

His secretary says: 'Justin is on his way,' then 'Justin will be here any moment.' It's all so informal. Then in he comes, all smiles, hand out-stretched. He's busy, busy, but has time for everyone. His fingers run though his luxuriant hair and he shows his perfect white teeth.

King has been smiling ever since he sprang into the City's consciousness, when he was recruited from head of the food division at Marks & Spencer to turn round the ailing Sainsbury's. Doubtless, there are times when he grimaces - though he insists he's not the sort to get depressed about work, however hard the going.

In the 12 months he has been at the helm, King's natural demeanour hasn't always seemed best suited to Sainsbury's. At times, he's looked young and untested, showing the Cheshire cat grin even when the news has been bad. As a result, some in the City, tired of failure at Sainsbury's, remain unconvinced about him, questioning his toughness and his ability to see the job through. That, though, fails to give King his due: he inherited what was in danger of becoming a car crash of a business and, at just a year into the post, he deserves space to put it right.

His own sense of timing is impeccable. For much of his tenure, the headlines have been negative. Then, with the anniversary fast approaching and commentators sharpening their pens to write him off, he pulled a rabbit out of the hat: unveiling the first improvement in underlying quarterly sales for more than two years. It was a like-for-like increase of only 1.7%, but it was an increase - something Sainsbury's had not seen for a while. King's triumph was capped by the fact that he delivered the results in the same week that Morrisons - once a stock market darling and another factor in Sainsbury's long decline - issued yet another profits warning and a fall in sales of 1.2%.

For once, his smile is justified. 'We're ahead of our own expectations. Sales are the purest measure of customer satisfaction there is. What many people have missed is that if you take account of 1.6% deflation, what we've actually achieved is over 3% volume growth.'

How did he do it? 'By re-engaging and re-motivating our 150,000 staff. They are the difference between our success and our failure. There's a noticeable spring in the step of our colleagues in-store. I've brought a sense of leadership, direction and communication.'

Talking and listening are very important to King. He contacts underperforming suppliers personally to find out why. Lunch is invariably in the office, a working affair with his team. All customers' e-mails and letters come across his desk. In addition, 'I write a monthly newsletter which I send to every colleague. I've started a suggestion scheme for all staff. What I'm trying to do is to create a sense of a management team that will understand the business and will learn to take in what staff say. If staff can see the context of the management team and who we are and how we work, they will believe in us.'

It's easy to dismiss such initiatives as tinkering, and scoff that while he implores staff to speak to him, the juggernauts of Tesco and Asda Wal-Mart trample everything before them. But this is Sainsbury's, a company whose management have not enjoyed a reputation for engaging their staff or customers, where the executives appeared aloof and detached - and unconcerned.

Once the country's number one grocer, Sainsbury's had slipped, allowing first Tesco and then Asda to overhaul it. Even third place, in the face of Morrisons' purchase of Safeway, was in jeopardy. The middle classes, for decades its staple shopper, spoke constantly of its decline, moaning they couldn't find the items they wanted when they wanted them; they heaped praise on Waitrose as a more innovative, quality-conscious and reliable chain.

So bad had Sainsbury's plight become that some spoke of its eventual disappearance. It was bracketed, along with the likes of Boots and WH Smith, as one of the 'legacy retailers' - companies living off their past and with a limited future. Sainsbury's seemed destined for takeover, with the family shareholders admitting defeat and ceding control. To add to King's discomfort, the likely bidders were a friend and a boss from his Asda days, Allan Leighton and Archie Norman. Ever since he was appointed, he has lived under their shadows. The danger may have receded, now that Sainsbury's has turned some sort of corner, but it could return at any moment.

King didn't fully appreciate what he was taking on 12 months ago. 'I'd competed with the business on and off for 10 years, so I had pretty good foresight of the challenges I was facing. Even so, it wasn't exactly what I thought.' Forced to take gardening leave by M&S, 'I went and visited lots of stores, so I could see how bad things were from a customer point of view.'

When he got his feet behind the desk and started analysing why a store would have, say, two-pint and six-pint cartons of milk but not four-pint that the full magnitude of 'the systemic problems' dawned. In short, it was one almighty mess, where staff were demoralised, an expensive IT system didn't work, goods in the stores were priced wrongly and customers were spending less. And it was getting worse.

'Failure begets failure,' he says. Successive leaderships had become obsessed with profits, not sales. 'Sainsbury's hadn't grown in sales for years; not since the early '90s - 1992-93 - had we grown market share. Tesco overtook us in the mid-90s, and from then on we'd focused on profitability and less on driving sales.'

This had the effect of masking the extent of Sainsbury's fall - profits had stayed relatively high even though sales and market share were slipping.

There was no disguising the depth of the crisis. 'I had five months on gardening leave and was offered all sorts of opinions,' he says - including Leighton's and Norman's.

When he finally joined Sainsbury's, his approach was simple. 'I started at the shelf and worked backwards. All you do in retail is buy the stuff, sell it and move it in-between. All I had to do was to get the business doing that right.'

He was also aware that although Sainsbury's was in trouble, it was only by a matter of margins. 'We were in a highly competitive market-place with two of the best retailers in the world in Tesco and Asda Wal-Mart.

If we were only slightly off our game we were going to lose market share very quickly. Food isn't like clothing, where you can see swings of 30% over a Christmas; if you're in the right locations, it will be a small matter of 2% or 3%. One retailer, Tesco, was growing very fast, at 6%-7%, and the rest weren't growing at all.'

He claims to be determined not to actively chase Tesco - which is perhaps just as well, as its profits sprint past £2 billion. But when did he last go into one of its stores? 'On Friday. I went in to check on their availability.

I was pleased to see that ours was better. You know, the thing about Tesco is their delivery. Ours used to be so inconsistent compared with theirs.' But, he stresses, 'one of the mistakes of the past was an obsession with profitability and playing nip and tuck with the opposition. If you spend your time looking over the fence at what your neighbour is doing you forget to tend your own lawn.'

There was no need for Sainsbury's to panic, to ape others. 'We still had 14 million customers shopping with us every week. I've said consistently that the biggest prize for us will be achieved by taking more money from them.'

Since his elevation, King has displayed a marked determination to keep his feet on the ground. Very much a family man, with his wife Claire and two young children, he continued to commute from their Warwickshire home every day at first, maintaining that the two hours each way chauffeur-driven journey allowed him valuable thinking time. He's had to concede defeat to the demands of the job, however, and now stays in London two nights a week.

King's lifestyle, like that of his arch-rival Sir Terry Leahy at Tesco, could be an archetype for Supermarket Man. He's rock-solid Middle England, middle-class, coaching his son's football team at weekends, sailing whenever he can (he's a member of Hayling Island Sailing Club). He watches football - particularly Man United. His most recent holiday was skiing with the family at Easter in Canada. He's not flash, not given to airs and graces. Claire shops at Sainsbury's and phones him if she spots something she likes or doesn't like. His mother is a Sainsbury's regular, too - has been all her life.

He comes across as remarkably certain and sure-footed, reducing everything to basics, speaking in pragmatic, realistic terms. Yet isn't this the same King who has been criticised for an over-reliance on management consultants, notably McKinsey, which helped him with his strategic review last October?

He nods. 'There are people in this business who have consultantitis, who use them to make management decisions. I'm not one of them. Consultants can bring learning and understanding, and you can also tell them where to look and they bring you the information you seek.'

The consultants were charged with discovering what was really going wrong, the true depth of the problem, and working with King towards a solution.

'There was a real disconnect between what the business was saying externally and what colleagues were saying internally. We were saying: "We'll change the process and we'll be alright." But that wasn't actually where we were. My predecessors were trying to provide reassurances at a time of great change - but if you don't understand the scale of the problem in the first place, you won't do anything different about it.'

A typical supermarket stocks 22,000 items. What concerned King was what his average customer's basket held: £30 worth of goods at about £1 each. Research showed that Sainsbury's would be missing five or six of the customer's 30 intended purchases. Now, he claims, that figure is much lower. But, he argues, 'perfection isn't hitting 30 out of 30. Say you're at home and you're down to your last four sheets of toilet roll. You may have some in the airing cupboard and remind yourself to buy more when you next visit the supermarket. Or, you may have none - in which case that's a big issue for you, and an even bigger issue if we don't have any. The figures mask different experiences.'

King says that despite all the flak directed at Sainsbury's, the company has a hidden historical strength. People are much more concerned about the origins of their food and what goes into it: health has become a huge issue. 'These are all things fundamental to the creation of this business.' Similarly, 'location is such a vital part of making a supermarket choice, and, on the whole, our locations are very good.' So, he adds: 'I came in to a place with 14 million customers, great locations, a great heritage, a reputation for good, healthy food. These are all advantages against a mainstream of young competitors.'

Sainsbury's was less competitive on price. 'If you're buying Coca-Cola, there's no differentiation on health grounds - it's all about price. We have to compete on price and we've lowered the prices of 6,000 items from a year ago.'

And slower to innovate, too. He wanted to launch a schools promotion.

Staff came up with the Active Kids campaign. 'I said: "Great, let's do it." They said: "It will be ready for January 2006." I said: "No way, I want it for January 2005." They said: "That's impossible, it's 11 weeks away." They made it in 11 weeks and it's great.' So far, 19,000 schools have signed up, an average of 40 per store.

He says he's 'not big on self-doubt' and adds: 'Businesses like this need a clear sense of leadership from their leaders.' He sums up the drive he brings thus: 'I want to create an environment where the art of the possible matters more.'

Pundits are always telling him where to position the stores. It's obvious, to me anyway, where the natural level lies: below Waitrose, with fewer stores and higher prices; and above Tesco and Asda. He doesn't disagree, breaking into one of his huge beams. 'That's a great place to be.'

His mantra to staff, he says, is 'great product at fair prices'. At this, he rushes from the room, returning seconds later with a melon, a mango and a carton of strawberries. 'See this melon; it's the best Galia melon available in the supermarkets right now. I know that, because we've just done a tasting. The others are from South America, which means they have to be hardy to withstand the shipping; ours are from the Northern hemisphere, which means they don't have as far to go and are materially better.'

He thrusts the strawberries towards me. 'Try these. They're terrific, aren't they? They're English, like the ones you get in June - but we're growing them now, under glass, in Norfolk. We're the only supermarket to do it.'

His melon, mango and strawberries are the most expensive on the market, he says, with the exception of somewhere like Harrods. But that's not the point. The strawberries, which I confirm are delicious, are two-and-a-half times dearer than the Spanish variety, but a lot nicer. Sainsbury's will sell both types side-by-side, giving the customer a choice. Time for another King maxim: 'Provided they're visible, they'll sell'.

Sainsbury's, he says, 'is a business that grew up with real retail roots'.

He plans on taking it back there. It's no use having stock stuck on a lorry or out the back - it has to be on the shelf. It's about giving customers what they want. The chain had lost sight of who its customers were and what they wanted. They don't want all premium-price items; they want to mix low price and high price, even the upmarket shoppers.

'I was in the Camden branch,' he says, 'which you will agree is in a pretty smart area of London. One in three baskets going out contained our Basics (lowest price) crisps. There was one woman, very well dressed.

In her basket was a bag of our Basics chicken nuggets. I asked her why she'd got them and she said they were the only ones her three-year-old son would eat.'

King has been pursuing everything being in the detail and the customer always being right ever since he left university and joined Mars on its famous marketing scheme. He worked in brand management there and at Pepsi Cola and Haagen-Dazs. Then came Asda under Norman (ex-McKinsey) with Leighton (also ex-Mars) and Richard Baker (now of Boots, and also ex-Mars), a glorious school for British retail talent.

King went on to run food for M&S, devising the successful Simply Food format, but Asda taught him how to listen to customers, motivate staff and hire the right team (he has assembled a formidable senior echelon at Sainsbury's) - plus the importance of time. Everyone forgets that Asda took years to transform, that Tesco didn't leap to the top overnight.

At Sainsbury's, he begs patience. He has set the company targets for the next three years, 'to fix the business base up and to put it into long-term health'.

New chairman Sir Philip Hampton (whose gravitas offsets many of the concerns about King's age and lack of experience) is giving him longer. Along with 1,100 head office staff and store managers, King is set to gain a bonus - in his case, nearly £5 million - if he adds £2.5 billion to annual sales and doubles earnings per share by 2006. 'The shareholders think I'll be very good value for money if I deliver on results.'

They must already be pleased. When he announced the latest results, the shares went up - quite an achievement, considering they have been underpinned by takeover speculation (the improved performance served to dampen that prospect). King claims not to worry about the share price or the possibility of a bid. 'The best defence for any business is to be well run. I've no idea about a threat. What I do know is that this is a better business today than it was a year ago.'

He gives his trademark smile. He stands up. He's got a photo to be taken and a business to manage. With more smiling. Of course.

THREE CHALLENGES FACING KING

1. Improving stock control systems to keep the right products on the shelves, all the time

2. Trying to keep up with rivals such as Tesco and Asda, two of the most efficient and well-run retailers in the world

3. Finding a formula for increasing the take from all shoppers

KING IN A MINUTE

1961: Born 17 May. Educated at Tudor Grange School, Solihull College and

Bath University

1983 Trainee, Mars

1989 Sales and marketing director, Egypt, Pepsi

1990 Managing director, UK, Haagen-Dazs

1993 Managing director, hypermarkets, Asda

2000 Executive director, food, M&S

2004 Chief executive, J Sainsbury

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