Do all idols have feet of clay? It’s tempting to think so after listening to the comprehensive humiliation of Parliament last week, accompanied by its footnote, a further (no doubt justified) trashing of City reputations, courtesy of the scathing Commons treasury committee report.
Yet not everyone in these times emerges as a knave or a fool. And here I think the marketing community has some reason to pat itself on the back. It has produced a handful of people who are leading their companies by example, and who actually have something to boast about. I’ve mentioned Bart Becht at Reckitt Benckiser before (MW February 19). But sectorally, the strongest performance is being put in by the supermarkets, which, quite aside from the tried and tested old firm at Tesco, have produced a number of highly competent executives in Mark Price at Waitrose, Marc Bolland at Morrisons and Justin King at Sainsbury’s. It can be no coincidence that marketing or heavy exposure to a marketing-led business culture have played a transformative part in the career of all of them.
King is, arguably, the most interesting example at the moment. When he took over as chief executive, many people were beginning to write Sainsbury’s off. There had been too many stalled recovery stories, and the fact of the matter was its upmarket positioning looked doomed as Waitrose and Tesco limbered up for a killer pincer movement from above and below.
Five years later, and in the face of a vicious downturn, the supermarket has turned in a level of profits not seen for many years. Just as importantly, Sainsbury’s is a much more confident brand, which through the expansion of basics has proved adept at using the recession to broaden its positioning (the “Feed your family for a fiver” campaign being a good case in point).
King’s talents as a turnaround virtuoso are now being amply rewarded. I’m not simply talking about the £3.5m bonus pay-out he will be receiving – without so much as a murmur of disapproval, bankers please note. But the fact he has been actively considered for the crown of UK retail: as a successor to Sir Stuart Rose at Marks & Spencer.
Had his candidature come off, it would have been aptly symbolic. Rose has had his work cut out battling with the downturn. Whereas King, who already has experience of M&S on his CV – he was director of food – has made beating the recession a speciality. Whether wisely or not, King has resisted the temptation to jump ship – for now. But, you can depend upon it, there will be other temptations along the way.
A remarkable aspect of King’s career is, as it were, his genetic heritage, his DNA as a businessman. King is an alumnus of the uncommonly talented Allan Leighton school of marketing. It is worth tracing the pedigree for a moment. King joined Mars after graduating. He will have been a much younger contemporary of Leighton, who was there between 1974 and 1992. A more important associate at the time, however, was Richard Baker, later chief executive of Boots: they worked together on the Galaxy brand.
King quit Mars for PepsiCo in 1989 and then joined GrandMet – collaborating with Simon Esberger, among others, to launch Häagen Dazs in the UK. The key career move, however, was to Asda in 1994 where he formed a part of the new management team headed by chairman Archie Norman and chief executive Leighton. At one point these rainbow talents also boasted Baker, who was a business unit director then chief operating officer; and Andy Hornby, who became retail director and then managing director of the George subsidiary before moving on to (initially) greater things as chief executive of HBOS. Leighton’s rolled-up sleeves, no-nonsense management style helped to convert Asda from supermarket basket case to one of the ultimate challenger brands of the Nineties.
Of these high-flying executives, King is now the only one left in the mainstream. Hornby, as we know, has been disgraced. Norman seemed to lose focus after an unsuccessful stint as a Tory politician. Leighton famously “went plural” after selling Asda to Wal-Mart. He has been much less in the public eye after stepping down as chairman of Royal Mail earlier this year. Baker hit the jackpot too early. He barely had time to prove his turnaround skills at the ailing chemist before it became Europe’s biggest ever example of leveraged buyout, and he was made surplus to requirements as ceo of the newly formed Alliance Boots by its new de facto overlord, Stefano Pessina.
By a curious coincidence, and about the same time, Sainsbury’s itself was the target of a massive leveraged buyout. It failed. Although King, like Baker, might have walked away much richer had it succeeded – it is as well for his reputation as a chief executive that it did not. The past two years have been critical to fixing his star in the constellation of business successes.
The question is, what will he do next? Strategically, Sainsbury’s looks boxed in post the recovery story. Any further foray into higher-margin non-food and electrical goods will mean locking horns with Tesco – which can much better afford a price war. As for expanding abroad, for now it sounds a non-starter. King seems to “genuinely believe the next five years are incredibly exciting” at Sainsbury’s. That probably means the next two, at the outside.