The horse meat scandal is dominating the news. What was your reaction when you first found out about the contamination? I first heard about it from the supplier involved just before the news broke to the public. I was surprised and concerned. Concerned for us as an organisation and also why it had happened, what had happened and the wider implications for the industry. As with all these situations, we always take the safety-first approach and if there are any question marks over any of the products on sale we remove them, which is what we did.
How does Sainsbury’s react to situations like this? We have a special incident meeting almost like the equivalent of the government’s Cobra. We have a group of people who represent all sides of our business and we have well-established protocols to work through systematically.
What testing has Sainsbury’s carried out? We’ve been doing tests right across our business. We’ve been doing DNA testing since 2002, but not for horse. We also do isotope testing, which allows you to verify country of origin. We start with the products that have the highest risk. We have found no evidence of horse contamination.
What do you think needs to happen now? There needs to be a re-examination of the validity of certification through the supply chain. This is one of the most heavily regulated and certified supply chains in any industry. It needs to be looked at again and there has to be the right, appropriate level of testing depending on risk across the industry.
Why did you remove the Red Tractor logo from products last year? We decided to remove Red Tractor because our customers told us it didn’t add anything and in the days when there is a huge amount of pressure for space on packaging and to make sure that labelling is clear for customers, it was just another level of visual clutter. So we felt it was appropriate to remove it. We clearly label our products with the country of origin and in the ingredients list. So it’s not a reflection of a lack of commitment to British sourcing. We have committed to double our sourcing of British produce by 2020.
“We have a special incident meeting almost like the government’s Cobra. We have well-established protocols”
High street regeneration is also a hot topic. What do you think the government needs to do to sort out the UK’s ailing high streets? By encouraging companies like ourselves to come into the high street. Our convenience stores are a force for good and many local traders welcome the presence of a supermarket on the high street because they bring more footfall and therefore more shoppers to their stores. The science of retailing is not difficult and to make any retail operation work, you need to provide customers with the right utilities, such as car parking, ease of accessibility and a vibrant mix of retail outlets.
Did you agree with Sir Terry Leahy’s recent comments that high streets are ‘medieval’ and that small shops closing is ‘a part of progress’? Terry may be able to make that observation as an outsider, but it is not something I agree with. If you are running a good retailer and think of a high street as a supermarket, then all provisions of service you see in a supermarket are what you want to see on the high street. The high streets that are doing the best are the ones that are providing this.
Sainsbury’s continues to extend its stores - why are extensions important? This year, we’re planning around 12 extensions. We always aim to do two things. We start with making our food offer as good as it can possibly be. Typically 50% to 55% of the space is given over to food. Then we look at what we then can offer customers from our non-food offer. We have seen the growth of that across our business. Putting those two elements together acts as a draw to customers.
You recently told suppliers at a trade briefing that ‘not everyone in the room can be on our bus’ - what did you mean by this? The industry has a challenge around volume and it would be disingenuous to say that we can grow all our suppliers equally because it isn’t the case. That means that we will have to make choices and those choices will be driven by how aligned are suppliers are in what we are trying to achieve.
You also said that you wanted to scale back promotions and the number of brands stocked. I didn’t say that I wanted to scale back brands. Our objective is to grow own label penetration and share. My view on promotions is that when you have some leading brands sold at more than 90% volume on deal, you have to ask what the underlying brand equity is. If all brands do is promote their brand to oblivion, that does not feel the appropriate way to build brand equity.
You recently signed up to the Prompt Payment Code, despite recent criticism of extending payment terms for non-food suppliers to 75 days - how would you defend this? The non-food industry is pretty well known for paying 90 to 120 days, and what we set out to do was to standardise payment terms to create a level playing field, which is exactly what we did. I stand by our adherence to our terms.
What’s your view on food inflation for 2013? In short, it depends on the weather. We’ve had a period of pressure in the supply chain, particularly in primary agriculture, driven by the poor early summer last year. We are still seeing the tail end of this and until the next round of crop yields, it is hard to judge.
One of the most frequently asked questions to Sainsbury’s is when is it going to start selling clothes online. So, when are you? We have no plans to sell clothing online - but we never say never. We are constantly reviewing our online offer and clothing is the most requested thing that we’re not selling online, so that would make us look very carefully at it.
Another popular one is when is Justin King going to stand down and when are you going to get his job? I am very happy doing what I’m doing, Justin’s very happy doing what he’s doing, and we’ve got a great team of people at Sainsbury’s!