Lord Sainsbury and an earlier age of austerity

Post-war Britain was broken, filthy, and ugly. Buildings were covered in soot and roads were full of large holes. Most people were having a bath (in a tin one) barely once a week, in front of the fire, and were still peeing at night into a chamber pot under the bed in lieu of an indoor lavatory.

In this struggling world, Sainsbury’s was struggling. It hadn’t had the best of wars some of the Greater London stores had been bombed, and many of the male workers had been called up at the start of the war. People did not want to travel into the middle of towns where the stores were situated. The brand’s price-competitiveness had been neutralised during the war years, when prices were controlled and food was rationed. Turnover had dropped to almost half of the pre-war level.

By the time John Davan Sainsbury joined, in 1950, things were picking up somewhat although life was still lived at austerity level, in a way that makes the current use of the word somewhat risible.

“I went into the grocery department because there was less rationing there, and I was put in charge of buying biscuits,” says Lord Sainsbury. “I really thought it was rather exciting. It was fascinating how go-ahead some people and companies were - and how stupid some others were. In those days, it was an achievement to get as much stock as you wanted, rather than just getting allocated.

“The stupid ones didn’t realise that Sainsbury’s was going to go places, so they kept limiting our allocation. But there was a man called Hector Laing, from United Biscuits - a great character, an absolute leader, bringing in new equipment, new machinery, in the biscuit business. I suppose in me he saw the next generation of entrepreneurs, and he let us have what we wanted. But there were others who took a very different view and limited our allocations.”

Before moving from the biscuit department to bacon, Sainsbury was sent to Calne in Wiltshire “to learn about how they did the bacon”. But the head of that business section was unimpressed by an Oxford arts graduate, asking, ‘What good do you think studying history does for your business commercial career? Not much!’

“So I said to the man, ‘Actually, I think it does me a great deal of good.’ Here was someone who lived on subsidies. All he ever did was go and talk to the minister and see that he got a better price and then he’d talk to the Farmers’ Union, to get them on side. It was all an appalling way that the state managed a business. Here was this man living in the past, running a very profitable business, with no competition. I could see that the market would change, and my instinct was that we would be the company to do it.

“After bacon, I went to assist my father in the trading side of the business. He’d been to America in 1949 to investigate this new idea of frozen foods, which we didn’t know anything about, and they found that not only was there this frozen food, but there were these self-service stores. There were many sceptics at the time, but my father was confident that it was the future. We set up our first self-service store - which was our preferred description - in Croydon in 1950 and as time went by, it did really well. Those days you couldn’t get planning permission to just build stores because there was a shortage of building resources and so on. But it was possible to get planning permission for shops in the new towns - Stevenage, Hitchin, Crawley, etc.”

The American supermarkets had emerged in response to a real social and economic need during the Great Depression. Sainsbury’s father had developed a crusading disdain for social injustice, deprivation, and unemployment, so not surprisingly, the new shopping concept gelled with him. It took a while, however, for the concept to be fully understood by the public of south London. At the opening, his father had a wire basket flung at him.

Opposition didn’t last long and by 1970, half of all Sainsbury’s stores were self-service. Yet more revolutionary ideas followed. The company realised that pack designs would take over from the role of the storekeeper (‘the silent salesmen’ they were called), own-brand labels would be introduced, store car parks would be built, and, of course, TV advertising would grow apace.

“I really was proud of what I learned from the Americans. They were incredibly generous with showing people what they did. They had the big chains, but very often the regional chains were very strong and had lots of confidential talks about how they did it with people in other regions that weren’t competitors. So the tradition of sharing knowledge was there, and they loved having a curious Englishman to educate. Learning all we could from the US meant that, in some respects, we were able to be years ahead of our competitors: for example in scanning, because we were so close to what was going on in the States.”

His father was also a huge admirer of Marks & Spencer, regarding it as a “brilliant business”, with incredible customer loyalty. When Sainsbury became chairman, M&S were making nine times his own company’s profit - by the time he retired, the situation had been transformed, with Sainsbury’s generating the higher figure. “By then, they weren’t moving as well or as cleverly as we were and they had failed to recognise the importance of the car and of siting stores where customers can easily get to that is, not often in the town centres.”

In 1973, the company was floated on the London Stock Exchange, with the family keeping an 85% stake, which was split unevenly. Alan’s three sons - John, Simon, and Tim - each received one third of their side of the family’s proportion, whereas the one son of Robert - David Sainsbury - (and not the daughters) received the full amount. Perhaps this was to give the more cautious David a greater proportion of votes to balance the more forceful leadership of John. Who knows? But it did not seem to lead to any bad blood.

“Finally taking the company public in 1973 was a very important decision and the good thing was, it wasn’t controversial. I think we all had somewhat different reasons for thinking it was the right thing to do, but it wasn’t a quarrel within the family. Frankly, we felt that such a large company shouldn’t stay private, and we wanted to share what we were doing with our customers and staff. In those days, we didn’t have unbelievably high bonuses as you can today, but we did have profit-sharing, which went to staff related to their salary, which was really worth having.”