The jury is still out on whether Mike Coupe left Sainsbury’s in better shape than he found it. The shares have lost around a third of their value in the six years Coupe has been at the helm, but the retailer is arguably standing up to the discounters better than any of its big four rivals. And a bold five-year plan set out in September leaves successor Simon Roberts with a clear path to follow.
So how is his experience likely to shape his approach?
Roberts has led a massive store restructure during his three years as retail & operations director at Sainsbury’s. Hundreds of manager roles have been excised in a bid to simplify how stores are run and take cost out of the business. Roberts has also been instrumental in integrating Argos more fully into operations.
But an even more store-based focus may be on the cards if his previous overhaul of Boots is anything to go by.
“We were re-orientating the business from being commercially centric to store centric,” recalls Scott Wheway, former retail director of Alliance Boots and MD of Boots UK, who promoted Roberts to Boots retail director in 2006. “I had come from Tesco and the big supermarkets had known for a while that the key to success is to make the customers drive your business by centring it around the stores. Simon led that whole revolution, moving Boots away from having the commercial and trading directors steer the direction of the business to what the stores needed.”
“He will run the business from the stores back,” agrees Richard Baker, CEO for Boots Group and Alliance Boots from 2003 to 2007. “He is not going to be a guy spending all his time behind a desk in head office. He will be on the ground, out and about, listening to his employees, who will tell him what customers are saying and he will respond energetically to that. He is enthusiastic and a realist.”
Differing managerial styles
It’s not just his stores background that marks Roberts out as different from Coupe, an ex-commercial director. His style is more approachable. Roberts is “extremely likeable”, Baker notes. “The Sainsbury’s staff will find Simon extremely energising.”
A former Boots executive, who worked under Roberts after he took the reins of Boots UK in 2013, agrees.
“Simon is a very resilient and optimistic leader, which makes it very easy for people to follow him. He creates real, positive energy in teams. You’d never describe him as distant and hierarchical.”
As an internal candidate, Roberts arguably has less room to put a new stamp on Sainsbury’s, but as an architect of that plan he may not want to.
At the Capital Markets Day in September, Coupe outlined plans to capitalise on the more affluent customer base of Sainsbury’s by getting it to spend on areas such as beauty. Richard Reed, commercial director at Sentinel Management Consultants and a former trading director at Boots UK, believes it would be natural for Roberts to want to continue with this strategy given his experience at Boots.
“He should bring an insight into how to talk to female customers,” says Reed. “His experience across stores and online at Boots gives him experience of talking to women in a different, slightly more personal way, whether that is through marketing, in-store promotions, store layout or social media.
“Every toothpaste, shampoo and shower gel that goes in the basket, which might have been bought at a Superdrug or a Boots, is a win-win.”
Biggest challenges ahead
While Roberts unquestionably has a strong operational record, City sources have questioned his trading, strategy and City experience.
But Baker argues this is no different for any new public company CEO, and Roberts will learn on the job. “You have to have the courage of your own convictions when it comes to the City,” he says. “Every analyst will tell you what they think you should do. Every investor will have a five-point plan they want you to execute. Simon is a strong guy; he won’t get bounced around easily. And he’ll need that strength early on because the sector is very difficult, it is not an easy trading environment for Sainsbury’s.”
Baker adds that Sainsbury’s chairman Martin Scicluna will be a valuable asset as Roberts builds his public company experience. “Martin will bring him a lot of cover in the first year, as he is so well known around the City.”
A bigger challenge could be staying competitive while executing the new five-year plan.
“The UK market clearly isn’t the easiest,” says Andrew Porteous, European retail analyst at HSBC. “It was a tough Christmas and a tough second half to last year, so he is coming into an environment where he has to take a lot of cost out just to stand still from a profit perspective.
“The discounters continue to grow, and you have new management coming in at Tesco. I would be surprised if the market backdrop stayed the same over the next two to three years, so clearly there is going to be change. How he copes with that is going to be crucial.”
Roberts will continue to drive the reorganisation started by Coupe, with hundreds of management roles disappearing as commercial, retail, finance, digital, technology and HR teams are brought together, and Argos is integrated ever closer.
But what other fresh ideas and personal spin will he bring?
Some believe Sainsbury’s has drifted since the failed Asda merger and needs to stay relevant.
“Roberts needs to come up with a refreshing set of messages”
“Roberts needs to come up with a refreshing set of messages for shoppers,” says Reed. “They want something a little more interesting than this week’s promotion or the odd themed event.”
AJ Bell investment director Russ Mould believes that with Coupe having grown the business, “he may place his focus on getting the best out of the existing assets through investment in IT, supply chain management and meeting customers’ changing requirements when it comes to the sourcing and packaging of products, as well as their price points”.
As important as the strategy is the team. Reed believes Roberts will use the first 100 days in the role to get the right team in place to execute the long-term plan. “He will be using the handover period to “define if he has the right team to work with and for him”.
“He needs ideas people, people who can make things happen; a stores operations team who are exceptional at getting things executed quickly and at the lowest possible cost; he needs truly world-class digital marketers. He needs a fantastic trading department, and a brilliant logistics department because he can save a lot or make a lot of money by being brilliant in logistics, which has typically been Tesco’s area of expertise.”
Meanwhile, with a delay to incoming Tesco boss and ex Boots colleague Ken Murphy’s start date, from the summer to October - thanks to a non-compete agreement - Simon Roberts will need no encouragement to steal a march on his old friend.
Start date as Sainsbury’s CEO: 1 June 2020
Base salary for CEO job: £875,000 a year
2017 - retail and operations director at Sainsbury’s
2015 - executive VP at Walgreens Boots Alliance and chief executive at Boots
2013 - MD at Boots UK & Ireland and Boots Opticians
2011 - Chief operating officer at Boots
2006 - retail director at Boots
2004 - regional director at Boots
2001 - regional manager at M&S
2000 - store manager Marble Arch for M&S
1998 - head of retail operations, UK store operations, at M&S
1989 - store management appointments across the UK for M&S