Now Sainsbury warns it does not have divine right to exist
SAINSBURY’S has become the latest retailer to warn that it has ‘no divine right to exist’.
The warning came as the firm was forced to defend the appointment of its chairman, who was embroiled in the disastrous takeover of HBOS by Lloyds.
Outgoing chairman David Tyler, 65, told investors at the grocer’s AGM that it had to ‘earn its success’ as it presses ahead with a £14bn takeover of Asda and tries to win back customers from discounters Aldi and Lidl.
It followed Marks & Spencer chairman Archie Norman yesterday warning that his firm had ‘no Godgiven right to exist’ and was struggling with ‘decrepit infrastructure, pretty weak IT, and old stores’.
The comments from two of the industry’s most senior figures underline the crisis engulfing the High Street amid an onslaught from online rivals.
Tyler noted that ‘even iconic retailers’ were being forced to shut stores. Waitrose has closed five shops this year while M&S is shutting 100 by 2022.
‘No business has a divine right to succeed,’ Tyler said. ‘In today’s marketplace we have to earn our success continually by adapting and improving.’
The firm was also forced to defend the decision to name Martin Scicluna as Tyler’s successor.
Scicluna, 67, was among the Lloyds directors that backed its catastrophic takeover of stricken rival HBOS in the financial crisis. Lloyds later had to be rescued with a £20.5bn taxpayer bailout.
Scicluna’s time at Lloyds prompted one shareholder at the Sainsbury’s AGM to question his suitability to lead the takeover of Walmart-owned Asda.
‘My concern at the moment is a lack of diligence in 2008 by a number of individuals. I don’t want to have a similar thing occurring in 2019 when we merge with Asda,’ said Ralph Eschwege.
Independent director Sarah Rice, who led the search, said Scicluna, who is also chairman of property group Great Portland Estates and insurer RSA, had been chosen due to his experience with large takeovers. The ‘coming together of Lloyds and HBOS couldn’t be more different’ than the Sainsbury’s-Asda merger, she added.