First published in June 2015
Mike Coupe gestures around him. 'We will stay in Holborn Circus, but all this will change.'
We're sitting in a meeting room in Sainsbury's Holborn Circus headquarters in central London. It's early morning, and the breakfast of bacon sandwiches, frittata, strawberries and Sainsbury's Taste the Difference orange juice is barely touched as he expands on his theme.
He may be making a virtue out of necessity - the sleek building is a white elephant that Sainsbury's has tried for years to offload and have now partially sub-let instead.
'We will change the building to reflect the way people work today, making it more communal. There will be a digital lab space - so we can exploit the fact that London is the third biggest digital development centre in the world.'
Change - it could be the watchword, not just for the Coupe era, but also for the sector as a whole. A combination of food deflation and price cutting, competition from the discounters and changing shopping habits (customers are eschewing large out-of-town stores for smaller convenience branches and online) have all come crashing together, and sent once booming giants reeling. The grocers have taken a reputational battering over recent years
Coupe is one of four new faces at the top of Britain's biggest supermarkets. Tesco, Morrisons and the Co-operative have all seen their chief executives depart. The three all went under differing circumstances, but the underlying cause was falling sales.
Sainsbury's was different in that Coupe's predecessor, Justin King, left of his own volition. But no sooner did he go than 36 successive quarters of sales growth came to a juddering halt and Coupe had to report a decline. That's been followed by five more consecutive quarters of dipping sales. Latest results showed a further drop, of 2.1%. King's timing, it seems, was impeccable. He and Leahy look like masters of the hospital pass.
Coupe missed out on an annual bonus after the chain failed to meet profit and sales targets. His pay package for 2014-2015 is £1.5 million. That's down from the £1.9 million he was paid in the previous financial year, when he was commercial director. Investors aren't faring any better: Sainsbury's shares are down 21% over the past 12 months.
There's a sense in the City, of Sainsbury's being caught in the crossfire between Asda and Tesco on one side, and Aldi and Lidl on the other. Along with Morrisons, it's seen as vulnerable, squeezed in the middle. It's all a far cry from when the company was in its pomp, in the late 1980s and early 1990s, with a reputation built over decades for premium products and service.
Given all that you could be forgiven for supposing the person opposite me would be all doom and gloom. Not a bit. Coupe is talking animatedly about the brand and what he predicts as a healthy future. 'We've got 25 million customers walking through our doors. I see this notion of us being caught in the middle as an opportunity, not a threat. If every one of our customers bought one more thing, that would make a huge difference to sales and profitability.' If he's under colossal pressure, he certainly is not showing it.
Coupe, it must be said, is not Justin King. Indeed, so different is he in both appearance and character that again, it's as if the board decreed that a complete change had to be made.
For 10 years, King held court. Blessed with still boyish looks and a gleaming white smile, he presided over a turnaround in Sainsbury's fortunes, followed by years of confident progress, developing online, convenience stores and non-food items, like clothing.
But all that time, it must not be forgotten, he was aided by Coupe, the brand's trading, then commercial, director. While King soaked up the plaudits, Coupe was in the background, quietly working away. The push into e-commerce and the 'brand match' initiative were his projects. He may not be a fizzing extrovert but neither is Coupe a shy geek. He's good company, chatty and open.
What are the differences between the Coupe chief executive and the King version? 'Look, it's necessary that somebody acts as a figurehead for the organisation. It's very important that they do the publicity. I feel I'm getting better at it. But there's no question: Justin was more outgoing. He had a natural ability in that space. I'm learning the skills as I've gone along.'
He pauses. 'I'm more introspective. I'm calm and measured. I very rarely get animated either way. I'm probably not enthusiastic enough when things go well. But then I'm not especially anxious when they don't go well.' That ability to remain calm in difficult times is a quality that he may need in spades, as Sainsbury's strives to rediscover its place on the UK high street and with online shoppers. It may also have helped him cope with the bizarre circumstances surrounding his brief in absentia conviction by the Egyptian authorities last year on trumped-up charges relating to a short-lived local joint venture in 1999, five years before he even joined Sainsbury's. Happily the two-year sentence was overturned on appeal last month, although Coupe did have to make a brief appearance in a Giza courtroom.
His style, he says is 'delegative. But if I need to be autocratic and directive I can be. I see the job of CEO as capturing the thought and imagination of the people who work for you. Plus I have a relentless focus on getting things right.'
His approach, he insists, is paying off. 'We're running the best shops. We've won awards that say so. They're the cleanest, the tidiest. We provide the best service to the public.' He and his team are, 'Big on detail. In 2004, we had a broken supply chain. It took a lot of effort to fix. Now we're focusing on the small things because small things can become big things.'
Despite falling sales revenues, he points to rising volumes in the last quarter as a positive. Likewise, he says, the number of items people are putting in their baskets has stabilised after dipping. 'One quarter is too early to call the turn just yet. But these are encouraging signs.' Online sales are climbing, as are those for clothes, despite mixed reviews for the ranges. Also, Sainsbury's Bank's 'click and collect' travel money service grew its revenues by 40%.
Coupe said he would cut prices and he has - £150 million worth. 'Investing in price reduction' the big retailers all rather disingenuously call it. But this was always a dangerous path for Sainsbury's to take - it's smaller than Asda and Tesco and does not have their deep pockets, and does not have the discounter reputation of an Aldi or Lidl. Which is why he's especially pleased about the chain being less dependent on discounts - they now account for 35% of total sales, versus 40% previously, and an industry rate of 35 to 40%.
There's no denying, though, that these are hard times for Sainsbury's and its rivals. But he emphasises, 'People think we're all the same. We're not.' Tesco's problems, for instance, went deeper, beyond falling sales, to allegations of rigging the books and treating suppliers in appalling fashion. Sainsbury's, says Coupe, is guilty of neither. 'You can get a short-term gain through renegotiation with suppliers, but medium to long-term it's not productive.'
Sainsbury's, he claims, is not Tesco. 'We're rated number one (by industry body the Groceries Code Adjudicator) for supplier relationships. That means cooperation, and looking for opportunities together. That's fundamentally different to some of our competitors.' He points to the bowl by him. 'These strawberries are a classic example. They're our biggest selling item in the summer. The packs used to have plastic lids that fell off. Now they've got film across the top and that's much better. That's us, working with suppliers to give customers what they want.'
New varieties of strawberry have been introduced and 'we're engaged in frontline research to produce them in Britain in glasshouses in winter. You can't do that without forming a partnership with suppliers.'
Although born in Watford in 1960, he has a rural background. The family moved to Sussex, and Coupe grew up, as he describes, a 'country boy'. These roots may explain his desire to live away from London. The family home is in York - he's married to Jill and they have two daughters - and he returns at weekends. I suspect it's a useful shield, too, against the demands of the London media and party circuit, where he likes to keep a lower profile than that of his predecessor.
He's got two brothers - one now a hairdresser, the other an electronic engineer. Their late father was an inventor. 'He had a successful company, making centrifuges for blood testing and that sort of thing. He was successful but was also unsuccessful - he invested in property in the early 1990s, just before property crashed.'
Coupe studied physics at Birmingham University. In his final year, he managed to steer towards his passion: the science of music electronics. He likes nothing more than to play the rock guitar at home (his other hobby is cycling the lanes of Yorkshire). But he's also played at Sainsbury's conferences in front of 5,000 people. And he's a Glastonbury regular, staying off-site.
On graduating he had 'no money' and no job. 'I walked up and down New Street in Birmingham. I came across Samuel Heath, a brassware company. They gave me a job travelling the north of England, selling high-quality brassware.' It was a formative experience. 'I learned a lot about myself, I stayed in run-down B&Bs. I just had a Ford Cortina, a bag of samples, and off I went.'
He followed that with a graduate traineeship at Unilever. 'I was posted to Van Den Bergh margarines, to what was known as the "Marj Mahal", its margarine factory at Burgess Hill in Sussex.' Working for Unilever, he says, was 'like being in the civil service. I could see where my career was panning out 20 years from now. Don't get me wrong - it's a great company, with very strong brands, but I wanted to do something more entrepreneurial.' So he applied to join the marketing department of Tesco, got the post, and found himself answering to two Tesco executives - Terry Leahy and Tim Mason.
Of Leahy, he says, the future Tesco boss was 'one of the two brightest people I ever worked for. The other was Archie Norman. They were both big on building relationships, very thoughtful individuals.'
He remained at Tesco until 1992, with 20 people reporting to him. 'It's often forgotten now that 1992 was a major recession - for the supermarkets it was very similar to how we are now. Asda came within 40 days of running out of money; Tesco flatlined; even Sainsbury's, which was pre-eminent, suffered.'
He joined Asda under Archie Norman and Allan Leighton and soon rose to commercial director. 'Asda became known for recruiting very good people. Most people in our industry went on the Mars, P&G and Unilever graduate schemes - but then some of them went through Asda as well, like Richard Baker, Paul Mason, Tony De Nunzio and Justin.'
For a spell, before he went off to Marks & Spencer, Justin King was there, working for Coupe. 'I found him the same as now,' says Coupe of King. 'He was very bright, smart, quite self-deprecating, very personable.'
After Walmart bought Asda, Coupe felt he was being sidelined, so he upped sticks again - this time to frozen food retailer, Iceland, which he ran for 18 months. Then, when Iceland's ownership changed, he was out of work. 'I needed a job. Justin and I had kept in contact. He got the Sainsbury's job, in 2004, and asked me to be the trading director and I jumped at it.'
Sainsbury's was a mess, and Coupe was promoted to commercial director. 'You're the fly-half, the quarter-back, responsible for play-making. You're the commercial engine of the business. Mind you,' he says, chuckling, 'you're the first to get fired if it goes wrong.' Historically, the company had been run along autocratic lines. 'We focused on colleagues, we focused on customers. We started by trying to do the right thing by everybody all the time. It became a different place to how it had been up until 2004.'
When King announced he was going, Coupe 'thought very carefully' before applying. They looked outside and inside before settling on him. Finally, he'd got the top job at a top company, and only one thing bothered him - the glare of publicity. 'If you run a large, consumer-facing organisation today, you are in the public eye. I had to explore the extent to which I wanted to put myself through that, and the consequential aspects for the family.'
So it is fortuitous that for the early weeks of his career the spotlight was mostly pointing at his biggest rival. Tesco is a ship in a storm casting off crew and ballast in order to remain afloat. But Sainsbury's itself is not in calm waters - a degree of urgency is required. Coupe is quick to dismiss Tesco's plight as long term. 'They've got new management teams. They're experts, and they will reset the business. There's an element of science to it, and they will do it.'
But he claims, Sainsbury's is well-placed for growth. 'We have 17% of the groceries market, 6% of convenience stores. In non-food, we have less than 2% market share. We've just acquired a bank. We've got 6% of the travel money market.'
His eye is on, 'The 60% of household expenditure that goes on groceries, non-food, energy and telecoms.' It's those last areas he wants to attack. 'The future has to be about more than groceries. Because in the end, you can be selling groceries in any market in the world and you will just about cover the cost of capital.'
In 2004, King wrote to lapsed customers urging them to revisit. Many wrote back, apologising for not using the stores. Coupe shakes his head. 'They were actually saying "sorry" which showed how much they cared, how much Sainsbury's meant to them. It said this brand is really special, that people can care like that.'
His task now, he says is to build on that loyalty and take Sainsbury's into others parts of customers' lives, such as banking, energy and telecoms. These are hardly uncontested markets.
But what of superstores, have they had their day? He shakes his head. 'No. The challenge for us is to reinvent the superstore for the future. It's a challenge for everybody. But I do believe the death of the superstore is grossly exaggerated. Do you know, 70% of groceries in the UK are sold out of town? 'We're looking at making our sites more attractive; by making it easier for people to get around, by using technology; by joining together offers.' In secret, Sainsbury's is developing a new-look store. 'It will take six to 12 months of experimentation before we know what the future superstore might look like.'
Mike Coupe outside Sainsbury's Holburn Circus headquarters. Photographs: Harry Borden
Moans about self-scanning fall on deaf ears. 'We're rated number one for service, but service is what it means to you as an individual. My youngest daughter wants to shop without any human interaction at all. My mother, by contrast, likes to talk to people. In our Tottenham Court Road store, more than 70% of the checkouts are self-scan, because that's what suits busy, working people with only a few items to buy.'
Supermarkets have also become too sterile and uniform. He agrees. 'One size fits all is over. Each operator has to be different. In our case we have to be brilliant at being Sainsbury's. That means we concentrate on providing quality, fresh food; we provide great service; and our people are the best in the business.'
What he wants to do, he claims, is 'to make your life better, to use our knowledge of you the customer in a relevant way. We want to use our different data sources and join the information together in a way that helps you.'
They're working on customers being able to use their mobile phones to scan and pay. And electronic shopping lists that encourage you to buy cheaper, cater for allergies, and keep a running total of what you spend.
What he will not do, he insists, is 'to use technology for the sake of technology. It has to make the customer experience better.'
After a shaky start, online is looking more promising. 'London is the most penetrated digital city in Britain - 10% of all groceries in London are bought online,' he says. Sainsbury's stores in the capital are working at full capacity to cope with internet demand, so they are opening a digital-only 'dark store' in east London.
The slowdown has sharpened minds as to the value of the properties the supermarkets are sitting on - and what else they can do with them. Sainsbury's has built apartments on top of its expanded Fulham store and plans more of the same at other branches. 'There's an element of truth in that our job is to manage property as well as sell groceries. Technically, in terms of how much we own, we're the third largest property company in the UK,' he says.
Even though the heady days of apparently constant superstore building have gone, the company is still adding to its 700-plus portfolio. 'We're opening one or two stores a week for the next three years.'
The City likes to speculate that the 'Big Four' supermarkets could become three, with Morrisons merging with Sainsbury's one possibility. 'Unlikely,' he says at that prospect. The competition authorities for a start would not allow it. 'They are there to protect customers, so why would they countenance reducing competition? Only when one was distressed are they likely to allow it to happen.'
Another mooted scenario is that Sainsbury's Qatari major shareholders launch a bid. Coupe has no inkling, he says, of that happening. 'They've been shareholders for eight years now. They're very supportive, and we continue to have a good relationship with them.'
And the Sainsbury family? They remain large shareholders. How does he get on with them? He smiles. 'I updated Lord John only yesterday.'
On the way out, the ground-floor lobby is crowded with people. 'It's a supplier conference, we've got 250 of our largest suppliers coming in.' To be given a hard time? 'No, to be told what we're doing and how we can help each other.'
He's quick, I say, and he laughs. King has gone; Coupe is the king now.
FOUR CHALLENGES FACING MIKE COUPE
To return Sainsbury's to sustained growth by giving back the brand's unique sales point of quality, fresh food
To expand non-food, to develop Sainsbury's banking, energy and mobile phones businesses
To take ground from a resurgent Tesco, to see off price-cutting from Aldi and Lidl too, and avoid being taken over
To form his own band of business stars (with Richard Desmond on drums?) and open Glastonbury from the Pyramid Stage
COUPE IN A MINUTE
1960: 26 September, born in Watford, grew up in west Sussex. Physics degree from University of Birmingham
1982: First job - travelling salesman for a brassware firm - followed by stints at Unilever then Tesco
1992: Leaves Tesco to join Asda
2001: Quits Asda to run Iceland frozen foods
2004: Joins Justin King, the new chief executive at Sainsbury's, as trading director
2007: Made executive director and given a seat on the board
2010: Promoted to group commercial director
2014: Appointed CEO of Sainsbury's.