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Sainsbury’s new boss Roberts faces unexpected in-tray

imageStock Markets6 hours ago (May 28, 2020 07:20PM ET)


(C) Reuters. FILE PHOTO: Roberts, Retail and Operations Director of Sainsbury’s, poses for a portrait at the company headquarters in London


By James Davey

LONDON (Reuters) – When Sainsbury ‘s (L:SBRY) new boss Simon Roberts hosts a virtual focus group with supermarket shoppers on his first day in charge on Monday, the conversation will be radically different from the one he might have imagined when he got the job.

In late January, Britain’s second largest supermarket group by sales after Tesco (L:TSCO) announced retail and operations director Roberts would succeed Mike Coupe as chief executive after his six years in the job.

Then the biggest issues Roberts faced were honing a strategy for Sainsbury’s to prosper alone after its failure to combine with Asda, owned by Walmart (N:WMT), getting through Brexit and fending off competition from Amazon (O:AMZN) and German-owned discounters Aldi and Lidl.

Four months on, those problems have been dwarfed by the coronavirus crisis, which has fundamentally changed Britain’s retail outlook and raised the prospect of a severe global recession.

For Sainsbury’s, whose shares are down 16% so far in 2020, the pandemic has boosted grocery sales but hammered demand for fuel, general merchandise and clothing, pushed its bank into a likely annual loss and raised operating costs across the group.

Roberts, 49, takes office with the exact nature and duration of the financial impact of COVID-19, the disease caused by novel coronavirus, impossible to predict.

As he seeks to impose his authority, he has the challenge of dealing with a team working virtually and, however pressing the need for short-term crisis management, he must not neglect the strategic, long-term decisions.

“As you look forward, there is a whole series of choices and some of those choices are short-term but a lot of those choices long-term that need to be made by the new leadership,” Coupe said.

For the longer term, Robert has to make the calls that can deliver growth, taking into account the disruption to consumer behaviour caused by the virus and lockdown.

Those changes include a more pronounced shift to online, less frequent customer visits to supermarkets, but a bigger average spend per shopping trip, and the increased popularity of local convenience stores.

Roberts has to figure out which changes will survive into post-lockdown times and how much money to plough into online delivery and technology.

He also has to assess the optimum configuration of Sainsbury’s store estate – currently over 600 supermarkets, 800 convenience stores and 573 standalone Argos stores.

And he has to decide whether to keep, or get rid of, the bank that is unpopular with investors.

Roberts won’t be the new kid on the supermarket CEO block for long. In October, industry leader Tesco also gets a new boss when Ken Murphy, a former colleague of Roberts at Boots, takes over from Dave Lewis.

Sainsbury’s new boss Roberts faces unexpected in-tray

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