Showman who saved an ailing empire
IN THE grey world of Britain’s corporate elite, Justin King stands apart from the crowd. He is the supermarket boss with the market stall-holder’s gift of the gab, and an orange perma-tan and head of lustrous chestnut locks that look more suited to a daytime television presenter.
Gregarious and with tremendous self-confidence, he is the opposite of his former great rival, the taciturn and now retired Tesco chief, Sir Terry Leahy.
Behind King’s love of showmanship and the limelight is an extremely sharp brain that is able to respond to any question about his business with rapid-fire facts and figures.
Over his ten years at the helm, he has turned around a failing family-controlled enterprise. His great achievement was to reposition Sainsbury’s as a favourite place to shop for aspirational families who might otherwise be seduced by rival Waitrose, with its more upmarket image.
The value placed on King was reflected in the sharp fall yesterday in the Sainsbury’s share price following news of his departure.
In 2004 he took over a dispirited company that had been pummelled by falling market share under the stewardship of David Sainsbury (the last family member at the helm) and wasteful investment decisions taken by Sainsbury’s successor Sir Peter Davis, who was ignominiously ejected from his job.
King moved rapidly to turn the business around. Part of his whirlwind approach involved cleverly anticipating people’s preference for smaller convenience stores that were within walking distance of their homes and widening choice to include clothing.
The result was spectacular, with profits tripling during his decade in charge – from £254million to £756million in the last full financial year – comfortably outdistancing King’s former employers, M&S. The group moved from a standing start to become the seventh-largest clothing retailer in the UK and launched its own fashion brand ‘Tu’. King has an instinctive nose for the nation’s food habits. Apart from emphasising the supermarket’s ‘quality’ image through its Taste the Difference range, he hired the nation’s favourite television chef Jamie Oliver to promote its image and products.
But perhaps his greatest achievement was to exploit technology in harness with attractive promotions in a way that entrenched customer loyalty.
FOR example, check-out tills were designed to automatically ‘price-match’ items with those of rival supermarket so that shoppers could see that the prices they were paying at Sainsbury’s were cheaper (or if not, they got a voucher to use the next time they shopped at the store).
This was a revolutionary piece of marketing. Ahead of his rivals, King seized the possibilities of online shopping and Sainsbury’s now does £1billion of its annual sales of £25.6billion on the net. Politically, he is not shy of expressing his forthright views: putting up a good case for lower taxes during an appearance on BBC1’s Question Time.
However, he was also tackled by the audience over high levels of boardroom pay. King notoriously claimed that his own £900,000 salary (40 times the average Sainsbury’s employee) was modest. In fact, his total annual remuneration (including pension contributions, share options and benefits) was £2.6million.
He also became embroiled in the horse meat scandal. At first, King claimed Sainsbury’s had not mislabelled any meat but then had to remove meat burgers from shelves after concern that they might have become contaminated.
Whoever takes over from grammar schooleducated King will have a tough task. Sainsbury’s Christmas sales figures showed some of the momentum he had built up – to gain a 17 per cent share of the market – was fading.
The invasion of German-owned Aldi and Lidl will be a formidable challenge for those now charge if they are to replicate the savvy, showmanship and success of King Justin.