The MBS Group

Justin King, CEO, Sainsburys and Raymond Ackerman, Chairman, Pick 'n' Pay, SA

Mon January 23, 2006 | The Fine Art Society, London

“In the 1950s I learnt that supermarkets should present themselves like Marilyn Monroe – desirable goods, openly displayed and readily accessible”. Raymond Ackerman, Chairman and Founder of Pick ‘n Pay and a global retailing legend, does not like to overcomplicate things. Justin King, his interlocutor for the evening is also a fan of simplicity – 2 years into his turnaround of Sainsbury’s, he has remained true to the principles that he set out before he joined. Though a generation apart, it becomes clear as the evening unfolds that Justin and Raymond share a similar approach to retailing, centred around clear leadership and a passion for the customer.

On Monday 23 January 2006 at the Fine Art Society in Bond Street, Moira Benigson, Managing Partner of the MBS Group, hosts an hour-long discussion between Raymond Ackerman and Justin King on the past, present and future of supermarket retailing. Raymond Ackerman’s legendary retail model has sustained 50 years of growth. Founded in 1967, when it operated 4 stores in Cape Town, it now boasts 535 stores and a turnover of R31bn.

“it’s important to focus on the customer first and worry about profit later” – Justin King

As long ago as 1949 at Business School, Ackerman learnt a philosophy which he has consciously adhered to over the years, based on ‘the four legs of a table’. As Raymond says, “it is a simple concept with the consumer at the top, with the four legs being tight administration, the right merchandise, advertising, and social responsibility.” He also states that successful retailing is about giving the consumer what they want: “Fight for the consumer and they will fight for you.” However, Raymond is clear that you only succeed by keeping your feet on the ground: “You make profit by putting your consumer first, but if your primary aim is to make profit you will never be a successful businessman”.

King has his own version of Ackerman’s ‘four legs of the table’. His three principles when he began the turn-around at Sainsbury’s were universal appeal – making the merchandise much more appealing to the broad population in the UK; second, fixing the basics – administration, to use Ackerman’s terminology; and third, a culture of customer focus – he says that strangely, for a retail business, Sainsbury’s had completely lost sight of the fact that it was the customer who paid everyone’s wages. “I agree with Raymond”, Justin says, “it’s important to focus on the customer first and worry about the profit later”. King also makes the important point that supermarket retailing should start from the grass roots up: the task of visiting every branch and meeting every store manager is not a chore but a means of gleaning valuable information.

“our supermarket philosophy is based on the four legs of the table. It’s a simple concept with the consumer at the top – the four legs being tight administration, advertising, the right merchandise and social responsibility” – Raymond Ackerman

The audience, populated by some of the world’s top executives from retail and FMCG, utter a collective gasp when Raymond reveals that 8% of Pick ‘n Pay’s after-tax profit is allocated budget for social projects: “I hope that we have built our company and reputation not only on hopefully having the right merchandise and staff, but by showing people that we really care. It’s been cardinal to our growth and to the respect that people have for us.” Ackerman’s major concern for the future of Pick ‘n Pay is that it should never abandon its sworn commitment to the service and aid of local communities.

Justin agrees, pointing to the fact that Sainsbury’s is a founder member of the 1% Club, who commit to donating 1% of pre-tax profits to good causes. He says that corporate and social responsibility is a principle on which the ‘grand old dames’ of the high street, such as Sainsbury’s, Marks & Spencer and Boots, grew: “Stores have to be 100% part of their local communities and not part of a big, faceless corporation that doesn’t engage at a local level.”

Questions rain in from the floor, first from Roger Whiteside, CEO of Thresher and former CEO of Ocado on the feasibility of extending a retail brand. He asks for their thoughts on what is ‘hot’ around the world. Justin cites Bristol Farms in California and Loblaw’s in Canada, while Raymond believes Tesco to be the gold standard in food retailing around the world.

Karan Bilimoria, Founder and CEO of Cobra Beer asks the two men for their thoughts on what makes a good leader. Raymond is clear: “Leadership is anticipating the future in all manner of ways, taking the people with you and setting goals.” Justin draws on personal experience: “My most worrying moment at Sainsbury’s was the realization that the business had lost touch with the people within it. They were disenfranchised and disheartened and the customers knew that from speaking to the staff. That was my wake-up moment and for me that was the key leadership challenge. We therefore had to create an absolutely clear picture of what it was we were going to do so that people would march behind it.”

“supermarkets should present themselves like Marilyn Monroe – desirable goods, openy displayed and readily accessible” – Raymond Ackerman

Simon Oliver, Chairman of Dairy Crest, asks about management succession. “It’s something I’ve really worked on”, Raymond muses. “Family succession has been really important to me, but Pick ‘n Pay is a public company and we try to run it as one, despite my belief that family-run businesses are a good thing”. For King, it is the legacy one leaves behind that is the key: “I personally believe that the greatest legacy you can leave as a leader is, in effect, to make yourself redundant, so that the business can run well without you, and you can go at a time of your choosing. That’s my personal ambition, to create a business that continues to be great after I leave.” It’s clear, though, that Justin is determined to put his stamp on global retailing in the same way that Raymond has. It might be sometime yet before he thinks of stepping down: “I’ve just got started!”, he says.

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