Simon Roberts, CEO of Sainsbury’s, recently commented on the cost of living crisis. In this episode, Jordan Greenaway and Sam Patchett discuss Roberts’ intervention and what the impact of his comments could be. Will this boost his public profile? How will the supermarket change its approach in the coming months?
About Simon Roberts
Roberts started his career in store management and regional operations roles for Marks & Spencer, before moving to Boots UK in 2003. His most significant role at Boots was Joint CEO and Executive Vice President of Walgreens Boots Alliance. He joined Sainsbury's in 2017 and became CEO in 2020.
Transcript
Jordan Greenaway (J): Welcome back to Acts of Leadership. Each episode we discuss a news story that is making headlines for the right reasons, whether it's a CEO leading the way, an investor rethinking how to make an impact, or a brand that's bucking the trends. I'm Jordan Greenaway, one of the Directors at Transmission Private. Let's get started.
On this episode, we're talking about the CEO of Sainsbury's, Simon Roberts.
Today, as always, I'm joined by Sam Patchett, another Director at TP. So Sam, can you give us a bit of a background on Simon?
Sam Patchett (S): Yeah, absolutely, Jordan. So, towards the start of his career, Simon worked for Marks and Spencer in store management and regional operations roles.
He then moved over to Boots UK in 2003, working in a number of director roles. The most significant was his role as Joint CEO and Executive Vice President of Walgreens Boots Alliance.
Roberts left Boots and joined Sainsbury's in 2017 as Retail Operations Director and eventually CEO from 2020. In terms of media coverage, he hasn't come out with any interventions in the past.
There was one article last year where he spoke about his vision for Sainsbury's, but besides from that, there's only been coverage about his £3.8 million salary and an article about why he quit Boots.
So, today we're talking about an article from the BBC. It's titled Life Tough for Millions of Households, Says Sansbury's Boss.
Jordan, can you talk us through the story quickly?
J: Thanks very much, Sam. And actually, while I was reading through Simon's career, I was actually, before I get into the story, very impressed by his career. The reason I was impressed is because he started in retail at 16 or 18 on the shop floor, actually came from a place not far from where I grew up as well. I know the school, you know, a local comprehensive school, and started on the shop floor at M&S and has held, I think like you said, about three roles.
So he's been in retail since the very start of his career. So he's one of these people who knows retail and has retail in his blood, so to speak. So I think that gives us a bit of context to discuss this story. And as you said, Sam, it's the one that's on the BBC and the article sees Simon making a statement about the rising cost of living in the UK.
We all know about the rising cost of living. Not only energy, but other prices are going up.
Rampant inflation in the economy at the moment – I don't know what the latest stats are, but it was definitely ticking above 10%. I saw some predictions that it might go as high as kind of 12-15%.
So in this context, Simon has come out and said: number one, its profits have been hit by the crisis, and the business is now sitting back and starting to ask questions about itself, about how it's going to help support its shoppers.
And the way that Simon has done that is he's come out with a punchy quote that says: we know and appreciate that for our consumers, life has been very tough and because of inflation is going to get tougher.
And the main comments in this particular article is that shoppers are watching every penny and every pound and that Sainsbury's understands how tough it is for millions of households. And in fact, he reorientates their whole strategy around being there for families during this crisis, investing in efficiencies and looking at all the products on their shelves and saying: how can we make those prices lower?
That's what the story's about, Sam.
Simon Roberts: Why did he make this intervention?
S: Thanks for outline, Jordan. So let's move on to the why. What do you think it was that led him to commenting on this? Is it because, you know, he wants to show a bit of sympathy and show that he understands the struggle that so many people are going through? Or is there, kind of, other reasons behind it?
I'd be interested to get your thoughts on that Jordan.
J: So I think the reason is: obviously the cost of living has been dominating the media landscape now for probably six months, maybe longer than that actually Sam, maybe 12 months. And of course, grocery shopping, I don't know what percentage that is of the average person's spending per month but it's gonna make up a significant amount of everyone's average spending. Everyone goes to the shop every week, month – it's an essential. So Sainsbury's have been sitting back and seeing this story rip through the media, and as you said earlier, and as I said earlier too, he didn't really have a huge profile.
I think that's actually because he's relatively new to the role, about a year and a half or so. But he hasn't said anything to date. Now given that this story has been the main story in all of the media, I think it's a matter of it would be remiss if he wasn't saying anything, rather than a proactive, positive reason to say something.
So he had to say something. He had to. This is the story that is ripping through the media. So they sat down and said: look, we need to, number one – given that we're a percentage of our main customers living expenses, we have to say something. And two, from a business perspective, if you're a mature, sensible, strategic business, you know that the game has changed.
A year, two years, five years ago, consumers might be going into to Sainsbury's because they wanted to buy high-end, more expensive products. That's not what consumers are looking for now. They're looking for value for money in an economy where every penny matters.
So I think this is: one, they needed to say something, but two, this is part of a strategic shift in Sainsbury's business towards servicing the needs and the requirements of consumers in this new economy where the macro economics are completely different and telling the public that they're doing that. That's my take, Sam. What's your take?
S: Well, it's interesting, Jordan, that you think it's a very, kind of, big move, a strategic shift in their strategy in terms of, you know, looking forward to the next six months, 12 months, even years down the track, and not just a kind of reactive comment to the media in light of all the relentlessly bleak headlines that we've been seeing for months now.
And not only is the news continually dominated by inflation and cost of living and energy prices, food prices, war in Ukraine, it doesn't look like there's any end in sight.
So, it is nice to have a business leader stand up and not so much show positivity, but more saying what their business is doing to try and help consumers, try and help their workers. Because up until now the spotlight has very much been on the government and what the government can do to reduce inflation and what the government can do to generate economic growth in the next few years but that's not gonna really make any change in the next few weeks for people that are really struggling, especially in the lead up to Christmas.
And it is quite refreshing to see Robert's talk about taking a hit to profits. About Sainsbury's increasing salaries for their staff because it's been particularly tough for the last 12 months.
And it does kind of raise the question of, you know, government aside and economic policy aside, what role do businesses have in terms of helping people out, not just to their consumers but also to their workers as well.
I mean, one thing that stood out to me was, you know, they're investing in efficiencies to keep prices down. Whenever a business leader says investing in efficiencies, the first thing that obviously comes to mind is job cuts. Doesn't look like there's any immediate, kind of, evidence of that at the moment.
So, look, whereas you talk about a strategic shift in Sainsbury's over the next few years, Jordan, I kind of took a slightly more short term view on it and thought maybe they're just doing what they can to help consumers out, help workers out, in, in the short term.
Future of Sainsbury’s: cost effective supermarket?
J: Which brings me to the next question, Sam, which is, you've spoken there a lot about the short term impact and the short term implications. What do you think the impact of this announcement will be on both Sainsbury's and Simon Robert's profile and the public perceptions of both him and the business at large?
S: People didn't necessarily know who Simon Roberts was until recently. I certainly didn't, and I'm not necessarily saying he's one of the pre-eminent business leaders in the UK now after making this one statement, but it is a very, kind of, savvy move from him I suppose.
And look, I don't want to take a cynical take. He's obviously also, kind of, got some positive intentions behind it. But in terms of how he's positioned in this, as I said before, increasingly bleak economic outlook, it is nice to see a sign of positivity and light at the end of the tunnel, so to speak.
So, kind of from a positioning/profiling perspective, I think it's gonna, you know, put him on the public radar and a lot more people kind of know who he is now, and for the right reasons as well.
J: And you know, you can always read too much into these things. I think sometimes when we discuss stories, we always suggest that there's some kind of Machiavellian, underlying strategy behind it. What's usually happened is that the individuals bumped into a journalist somewhere and not even aware that the stories come out until it's come out.
That said, I thought this intervention was interesting and I think it was interesting because of the wider business context. Let's look at the grocery market over the last 10 years. We know that Sainsbury's has actually had, Sainsbury's and Tesco actually, have had difficulties over the last 10 years. Why?
They're being squeezed from the top, by the likes of Waitrose, M&S, et cetera. And they're being squeezed from the bottom from the likes of Lidl and Aldi. So, in that context, could this intervention be read as a wider strategic repositioning of Sainsbury's itself into that more cost effective, more affordable category.
Now, like I said at the start of this, it's always easy to read too much strategy into these comments, but I wondered whether there wasn't something behind it. He's new to the job, he's only been there a year, year and a half. He wants to put his stamp, so to speak, on the company, and maybe the strategy internally is to offer both quality and low cost, and the way to try to get that message across in a powerful way was to intervene on this story.
Because, when it comes to being cost effective, you don't automatically think of Sainsbury's. You think of Lidl and Aldi. So maybe this was a way to punch through the public perceptions of Sainsbury's and say: actually guys, you've got it wrong. We can be cost effective as well, and we can compete in that Lidl and Aldi price class. Again, I might be reading too much into it, but I thought that was maybe an interesting conspiratorial take.
S: Well, if you are right and accurate in that sense, Jordan, it's a bit of a shame really that it takes a global reccesion and a massive cost of living crisis for supermarkets to think how they can be cost effective and offer nice products at the same time.
But, it has got me thinking about what might be next for Roberts. Will he keep commenting on inflation and the state of the economy, do you think?
What is the impact of Roberts’ comment?
J: Look, if I'm right. And by the way, I don't mean to undermine the sincerity of what he's saying because I think you can come out with a strategic, powerful message and also be sincere.
And in fact, the most sincere messages are often those that are aligned with your strategy because they're true. But if that's the case, then I do think we'll start to see Sainsbury's and Simon Roberts, and Tesco actually who has been out and about on the airwaves a little bit more often recently.
I think we'll see more of those squeezed in the middle supermarket brands try to use this as a juncture to show to consumers in a positive and proactive way that actually, we can be cost effective as well, and to reassess your shopping habits, if you think that the way to save money is just by default to go to Lidl and Aldi.
So I think we'll see marketing and advertising campaigns from the likes of Sainsbury's and Tesco on these topics, and given that Simon Roberts and the Chairman of Tesco have recently come out to intervene on these topics, I think we'll be seeing them on our screens more often over the next year, actually, on this exact topic.
S: I agree, Jordan. I think the public is screaming out for some new content and some new news in this space because at the moment, as I said before, the media spotlight, the public spotlight has been so fixated on politicians and on Westminster and it's all getting a little bit tired and boring, isn't it?
So it'll be interesting to see if the media and the public look to business leaders to kind of offer comment and say what they're doing to address these issues.
J: Thank you very much, Sam and I'm certainly looking to see what he says next on this issue, although he could go back to what he knows and comment on issues like the vision of the company like he did before in The Times, and I suggest everyone reads that because that was an interesting article as well.
On that note, thank you for joining us for this episode of Acts of Leadership. Tune in next time for more discussions of how the leaders of today are making waves. To find out more about Transmission Private and our work supporting entrepreneurs, CEOs, executives, and investors with their personal profiles, go to www.transmission-private.com.
