The people’s CEO: how Simon Roberts changed Sainsbury’s culture

It’s almost four weeks since The Grocer Gold Awards and Sainsbury’s CEO Simon Roberts is still buzzing. “Sainsbury’s was last privileged to win the Grocer of the Year in 2007. So it was a huge moment for the team to know that, for the first time in 17 years, Sainsbury’s is really setting the pace again.”

It’s a personal triumph for Roberts. Without ‘kitchen sinking’ profits upon his elevation to the CEO role in 2020, and without any significant store expansion programme, the 53-year-old’s ‘Food First’ strategy is outperforming the market, consistently delivering value and volume share growth.

Switching data shows it’s been the only traditional big four supermarket to win shopper spend from both the discounters – in the midst of a cost of living crisis [NIQ]. But Roberts doesn’t want to steal the limelight, keen to stress it’s a collective achievement. “This is an award for every single member of Sainsbury’s, because everyone’s played a part in winning it, and it’s had a massive impact on pride and belief in our Food First plan,” he says.

Such inclusiveness is typical. Affable, effusive and self-effacing, he’s the people’s CEO, with a strong sense of service – to shoppers, colleagues, shareholders and suppliers. It’s made Roberts hugely popular with senior colleagues and shopfloor workers alike.

But he repeatedly deflects any praise towards the collective. It’s a ‘People First’ strategy as much as it is a ‘Food First’ strategy, he says. The culture has been about reset – empowering shop floor staff with a broader skillset and greater training, while offering shop floor pay levels 50% higher than five years ago.

In the meantime, he’s stripped back the senior leadership team from 10 to just seven executives – of which four are women.

It’s a “very intentional decision”, says Roberts. “We had a board where we didn’t represent our colleagues or our customers. We do now.”

It’s not just at board level, either. “We’ve got fantastic diversity throughout our leadership teams. If I look at the top 300 leaders, there’s been a very marked shift. It’s up to 46.6% [women]. And the way we choose to do things here is fundamental to our strategy.

“The grocery industry is tough, it’s incredibly intense. It requires a different leadership muscle. The people that shop with us require a different emotional connection right across the organisation.

“So it’s no accident that 28% of our store managers are now women. We are attracting senior women from most of our other competitors because of the cultural shifts we’re making.

“And this applies to all the other elements of diversity. We have networks for every single diversity stream. It’s something I’m really proud of: that in Sainsbury’s, D&I has been a key driver of our change. And it’s been driven by our team, there’s a collective determination.”

’We were too expensive’

Of all the changes Roberts and his team have pushed through in the past four years, perhaps none has required more “collective determination” than Sainsbury’s price position. It was one of those “elephants in the room” that was preventing progress.

“We were too expensive. It was that simple,” Roberts says. But he recalls being told it would be impossible to re-establish its competitive position without a fundamental profit reset.

Yet fast-forward to today and with a whopping £780m investment in price, Sainsbury’s is not only “the most competitive we’ve been in decades”, it’s done so while improving the bottom line. In fact, it’s offering “the best combination of price and quality in the market”.

“No one has delivered the same level of innovation as us in the past four years,” Roberts claims. More than tripling the number of new launches – to over 2,000 – in the first year “was an engine for driving change and growth”.

While others “have just started getting on the programme”, Sainsbury’s NPD push isn’t slowing down. Averaging 1,500 food and drink lines per annum over the four-year period, it’s added another 400 in the first quarter of the new financial year.

In particular, Roberts highlights the starring role of innovation in the “market-leading” growth of Taste the Difference. Its sales have risen 33% to £1.6bn since the launch of Food First, and were up 14% in Q1.

Less defensive, more ambitious

None of these investments would have been possible, however, without the huge £1.3bn cost saving programme that has run concurrently. (Or at least, not without crashing Sainsbury’s profit margins.)

That’s involved making “a bunch of decisions”. Crucially, Sainsbury’s has delivered them at pace – like ripping out the store counters.

At the time, that was a controversial decision. “There was lots of nostalgia about our counters,” Roberts recalls. “But waste was high, service was going down, availability wasn’t good.”

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The speed at which the counters were removed was another important departure from the past, another new “muscle” for Sainsbury’s to use as a business.

“Whereas some of our competitors chose to do the same over an extended period, we just did it. It was a really clear example of us acting quickly and decisively, in line with our determination to be less defensive, more ambitious and more outward-looking.”

A more recent example was the speedy rollout of Nectar Prices. Having laid the foundations for its improved price positioning with Aldi Price Match, the loyalty price scheme launched in April last year with a few hundred lines, but accelerated to 7,000 in a matter of months. With five million new members, and over 90% engagement, its success “speaks for itself”.

Strategic levers

Roberts also rejects suggestions that Sainsbury’s pricing strategy has simply followed Tesco’s lead. “Not all price matches are created equal,” he points out. It’s working better than rival schemes, he claims, because more of its matches are “on high-volume and fresh products that people want to buy every week”.

Nectar Prices is also unique in offering fully personalised loyalty. Available on SmartShop and online, “no one else in our space has developed personalised loyalty like us”, Roberts enthuses, whipping out his phone to demonstrate offers on two of his favourites: raspberry protein yoghurts and orange juice.

Another high-profile technological success has been Sainsbury’s retail media expansion. But arguably more important has been the focus on the retailer’s two biggest costs: replenishment and checkout.

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On the replenishment side, the rollout of a new demand forecasting solution called Blue Yonder is due to complete this summer. “Availability is a strategic lever, not an operational one,” he says. The investment is already proving a “game-changer”, with its machine learning algorithms improving availability by 51bps and reducing over-forecasts by 50%.

“We send the stock to each store based on forward volume and likely demand, which is linked to a wide range of variables, including the weather, which as we know can vary a lot from one store to another.

“It also means we’re not moving a load of stock we don’t need at that point in time. So it’s more efficient and more accurate.”

Front of house

The other in-store investment is more controversial. Sainsbury’s has replaced vast numbers of manned checkouts with more self-checkout machines.

Roberts is unapologetic. “As an industry, we can’t say we can’t become more efficient. In a 3% margin business, with the cost pressures we face, we have to find efficiencies.”

He also insists Sainsbury’s approach is better than rival large-format supermarket solutions. Its ‘Future Front End Programme’ is not just about efficiency, he says. With different checkouts for big shops, as well as top-ups and new SmartShop areas for use with mobile phones and handheld scanners, the aim is “to win more big trolley shops”. That’s why it’s also committed to retaining at least one manned checkout at all times, but with new technology that prompts shop floor staff to open further belted tills if queues build up.

The approach also highlights another key point of difference between the old Sainsbury’s and Sainsbury’s 2.0. Whereas convenience previously seemed the only source of growth, now it’s almost an afterthought.

“No one else in our space has developed personalised loyalty like us”

Whether it’s the checkouts, Nectar Prices, or personalised offers that are exclusive to SmartShop and online, the strategy is “laser-focused on long lists and big trolley shops”.

And with its new ‘Next Level Sainsbury’s’ strategy doubling down on its Food First commitment via major store space reallocation, “we think there’s a lot more volume we can win in food”.

Long-term supplier partnerships

And there’s one final investment Roberts highlights in its Food First strategy: support for suppliers.

That’s about not just negotiating cost price increases but switching more transactional negotiations into long-term partnerships, he says. Roberts points out 40% of Sainsbury’s fresh food is now being sourced through long-term partnerships of five to 10 years.

Instead of teaching suppliers a lesson, as per the old regime, it’s now “a core philosophy of Sainsbury’s to work in partnership with them”, he adds.

The level of certainty achieved by longer agreements encourages “more innovation, achieving better animal welfare, ensuring more food is 100% British, healthier, and produced in a more sustainable way, while offering better value”, Roberts stresses.

“And who we are and how we are is how we show up with our supply base. We believe in deep relationships. We believe in partnership. We believe in creating joint value, and as a result I think you’re seeing more and more suppliers wanting to work with us.

“We’ve begun a journey to really build the potential of Sainsbury’s as a food-first business… but we can only do it in partnership with the people we work with.

“And if there’s something in the Sainsbury’s culture we’re describing here it’s our appetite to keep improving.

“We feel pretty humble. There’s a lot more to do. But we’ll keep pushing for what we think is right. So we’ll hopefully be in a position where, in 10 years, when someone says: ‘What were the folks at Sainsbury’s doing?’ they’ll say we were making the right choices about the right things.”