Murnaghan 28.04.13 Interview with Justin King, CEO Sainsbury's

ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: Now then, the Chancellor must have breathed something of a sigh of relief this week as the latest growth figures showed that Britain has avoided a triple dip recession but what about the country’s leading business figures? In a moment I’ll speak to the Chairman of Goldman Sachs Asset Management, Jim O’Neill but I’m joined now by the Chief Executive of Sainsbury’s, Justin King. A very good morning to you Mr King.

JUSTIN KING: Good morning.

DM: Okay, so no triple dip recession, what does it look like from Sainsbury’s point of view, would it have made much difference to you, the official figures?

JK: Nothing at all, no, whether it’s a double dip or a triple dip, we all knew the economy shrank a few years ago and it feels like it has been bouncing along the bottom ever since so no, we’ve not seen a change for two or three years and we don’t expect to see a change for another two or three years yet.

DM: But in consumer behaviour, you’re at the coal face, is it the same as it’s been for the last five years, people looking for value products, the odd treat, something like that?

JK: Well the big change took place actually a couple of years ago with a shift for people buying slightly less in their weekly grocery shop and then topping it up as and when they needed in convenience shopping, avoiding waste through doing that. That change took place and it stuck and we expect it to stick. People are still treating themselves, special occasions, when the sun shines – and it’s shining a little out there this morning, people will still splash out a bit for a barbecue or a family party but the rest of the time they are being very careful with their money.

DM: Interestingly, you are talking there in a sense of anticipating the way things are going, there’s another area I want to bring up of course, the great horsemeat debacle. That was something you seem to have anticipated at Sainsbury’s as well in getting control of the whole supply chain.

JK: Well we do have more control in our supply chain, more reach into it, than most of our grocery competitors so we weren’t touched by the horsemeat scandal and we think that follows from having more control of your supply chain. Of course you can never say never, these things are very far reaching, but we have a real reach down into our supply chain, we know our farmers, we work with them directly and that made a big different for us in the scandal.

DM: You mentioned your big competitors of course, let’s talk about Tesco and the problem they’ve had in the United States, pulling out of the Fresh and Easy chain, is that something that Sainsbury’s must have looked at I suppose in the past, would consider more expansion, expansion into that huge market but one that is difficult to get right, the United States?

JK: Well Sainsbury’s did actually, in the 1990s we built a business called Shaw’s in the States, in fact one of the very first things I did when I joined was sell that business and I got a good price for it back in 2004.

DM: Would you go back there?

JK: Well no, we sold the business in America because we realised we needed to turn our attentions back to making our business in the UK, our domestic business, stronger and we took the money for that and it helped us reinvest in doing a great job for customers here in the UK so we look back on that as a good decision.

DM: But you look at Tesco’s experience and say we were right not to go back and we’re certainly not going to try that in the near future?

JK: No, we are focusing on the UK.

DM: Okay, well that’s very clear. How about you, are you focusing on Sainsbury’s? You’re being touted around a lot these days for Marks and Spencer’s and as head of Formula 1 even.

JK: Well I understand why people speculate about these things, I’ve been in the job nine years, that’s a lot longer than is usual for FTSE 100 chief execs but I thoroughly enjoy my job. I see the growth prospects for our business for many years to come and I’m excited at being part of those so no, I’m not planning on going anywhere.

DM: But what about M&S, you couldn’t turn that down, you’re an old M&S man aren’t you?

JK: Well I am, I’ve done my stint if you like at M&S, I ran the food business for three years and I enjoy being at Sainsbury’s, I can’t see any reason why I’d want to go and run that business and of course there is an incumbent in the job. Marc’s doing that job and I’m sure he’ll face into the challenge of …

DM: Or a merger, Sainsbury’s and M&S together?

JK: That’s been speculated on over the years but that’s not something that’s going to happen from a competition point of view. We like competing with M&S and Tesco and the other grocers, that’s what’s great for consumers in the UK.

DM: And what about Formula 1? Bernie Ecclestone admits he’s getting on a bit, I know your son is involved in motor racing, it’s something of a passion of yours isn’t it?

JK: Well I think that’s why people have made the link. I’m not aware there is a vacancy, Bernie may be getting on as you say but he has said very clearly he sees himself there for years to come. I understand why the link has been made, my son is a racing driver, it is my passion supporting him and his career ambition but no, once again I see myself staying at Sainsbury’s.

DM: Let me talk to you about another of your passions which was exhibited last year and much discussion about it now, your involvement, Sainsbury’s, your company’s involvement in the Olympics and the Paralympics in particular. It seems quite a long time ago now doesn’t it, in 2013, certainly the dark days, the dark economic days and the dark days meteorologically, the Olympic legacy, people are beginning to feel its been lost a bit.

JK: Well I can understand that because it’s heading up now to a year ago but I don’t think in reality it has been lost and we’ve invested in supporting the British Paralympic Association through to Rio, we’re investing in training teachers to bring disabled children into mainstream PE and just recently we’ve announced what’s called the Sainsbury’s Summer Series, three events, two in Birmingham and one on the anniversary of the Olympics, back in the old Olympic stadium, which we are sponsoring and they are integrated events. They have able bodied athletes and disabled athletes across a weekend of sport so we are playing our part in the legacy for sure.

DM: It sounds a great event because so many people were disappointed not to have had that stadium experience during the course of the Paralympics and the Olympics themselves so how do you get tickets for that?

JK: Well the one in the Queen Elizabeth Olympic Park have already sold out but the two in June at Birmingham’s Alexandra stadium, there are still tickets available for that and you can go on the British Athletics website.

DM: Okay, so you’re doing a bit to keep the Olympic and Paralympic legacy going and of course the economy, the bigger issue. Justin King, thank you very much indeed, CEO of Sainsbury’s there.

JK: Thank you.