Memo to Mike Coupe: five lessons for Sainsbury's new CEO

Mike Coupe: ready to take over from outgoing CEO, Justin King
Mike Coupe: ready to take over from outgoing CEO, Justin King

As Mike Coupe readies himself to take over from outgoing chief executive Justin King, Kate Jones, director at Mash Strategy, lends five pieces of advice.

There is nothing like going out on a high as Justin King prepares to hand over the reins to commercial director Mike Coupe, with his final results announcement reporting a 16.3% rise in annual pre-tax profit to £898m for the year to 15 March compared with £772m a year earlier.

What a great legacy – Mr King will be forever known as ‘the one who turned it around’ during his 10-year tenure in charge.

Own-brand investments
Highlights from these results show how Sainsbury’s strategy of investing in its own brands, non-food offer and store base have paid off. Taste the Difference range is soaring, accounting for more than £1.1bn in annual sales. General merchandise and clothing are flying off the shelves at twice the rate of food and convenience stores drove 19% of overall sales growth

Not bad going either in a tough retail environment that has seen a great deal of change over that time – from the retail landscape itself, consumer attitudes and behaviours and of course big, big economic swings.

Shopping just isn’t the same anymore and the rise of the savvy shopper, the surge of the discounters, movement away from out of town and a myriad of food scandals have made it a cut-throat environment where getting it wrong has serious consequences. You only have to look at arch rivals Tesco who saw sharp 6% drop in profits to know even the mighty can fall, not to mention Morrison’s struggling form described by one ex-director Roger Owen member as ‘a supertanker heading for an iceberg’.

King's legacy

It is little wonder that Mr King is so revered as against this dramatic backdrop. Under him, customer transactions increased by 10 million a week to around 24 million, annual sales grew by £10.3bn and pre-tax profits trebled. Sainsbury’s has clawed its way back to the number 2 spot, having been beaten into 3rd by ASDA in the bad old pre-King days.

However, this is no time for complacency. Despite the great numbers and numerous triumphs, the market is still very tough and challenging.

Like for like sales, which strip out trading at new stores, excluding fuel, rose by just 0.2%. Back in March of this year Sainsbury's reported its first quarterly fall in like-for-like sales for nine years, with sales down 3.1%.

Not the ideal time for Mike Coupe to be taking over - how is he going to fare in the shadow of the King?

Mike Coupe is no newbie. A retail thoroughbred like his predecessor, long-time colleague and friend. However, despite years of working closely together, Mr King and Mr Coupe have very different styles when it comes to leadership.

On one hand you have the charismatic King, adored by the masses and treated like a celebrity on store visits, a real face of the business.

Behind the scenes is the altogether quieter presence of Coupe, muted as being responsible for the great strategic thinking that has served the business so well. However he fares, and first indications are good, it is certain that his leadership will be different in style as Sainsbury’s moves into a new, challenging era. Will we see more of the same from him in terms of strategy?

Over-diversification?

As arch rival Tesco further diversifies with the launch of the Hudl Android smartphone you have to ask the question ‘are they delivering me a great retail experience’.

Democratisation of technology is a great aspiration, but is it really what people want from a supermarket?

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