n There are lots of things we can do,' says Sir Peter. All will be revealed in May. A sell out is not on the cards, but a merger just might be. Julian Hunt reports on the Davis agenda The message from the Sainsbury's board to its new chief executive is clear enough: put some pizzazz back into our supermarkets business and, in the process, rebuild shareholder value. That's easier said than done. So it is hardly surprising Sir Peter Davis is being very coy about his plans. "There's a challenge," he says. "There's no disguising the fact there are problems. I don't know precisely what I'm going to do. The biggest mistake I could make is assume I know what needs to be done." He officially joins from the Prudential on March 1 and is giving himself a couple of months to get to know the Sainsbury business and understand the true scale of the problems it faces, before he makes any pronouncements on future stategy. In the meantime, Sir Peter has laid out what can only be described as his mission statement. "We can deliver shareholder value by making our customers happier, by making Sainsbury somewhere special to work again, and by making staff proud to work for us again," he says. "Part of my job is to give management confidence to do the things they want to do. They have been embattled over the past few years." But Sir Peter is quick to stress it's not all doom and gloom at Sainsbury. "Go round the newer stores and there are some wonderful ideas, new and exciting product ranges, warmth and colour. We need to capture all this and make sure it goes throughout the chain. "There are lots of things we can do, lots of things are already in place and there's lots already being developed. We just need to step up the pace of change and drive it fairly hard." Sir Peter also makes it clear the supermarket division still needs to get some of the basics right. It has to improve customer satisfaction through better stores, service and availability, he says, while slashing overheads. Outgoing chief executive Dino Adriano tried to get to grips with these issues ­ and rid the business of bureaucracy ­ for much of the past year. But investors continued to bay for new blood at the top. They wanted a strong leader who could quickly force through the changes that would ensure Sainsbury survived the truly profound structural changes under way in the retail sector. Judging by his track record, Sir Peter is not afraid to make difficult decisions or engineer significant change. And that has led to speculation he will be prepared to think the unthinkable: such as selling Shaw's and pulling out of the States, or divesting Homebase. Many investors would love to see that. His experience at the Pru means he will also be taking a close look at Sainsbury's Bank. And as befits the man who launched the highly successful Egg online bank, Sir Peter is itching to get involved with Sainsbury's business on the web. "They have bold plans to develop quite significant Internet activity and I will give that a lot of support because I am an absolute e-convert," he says. But all of that will be a sideshow to the real business in hand: sorting out the supermarkets. Sir Peter says he is looking forward to working with his highly ambitious deputy David Bremner, who now heads Sainsbury's Supermarkets. Bremner has already reshuffled his management team, with the appointment of a new marketing director and the creation of a stores director role being the most significant changes. Clearly, Bremner has plenty of ideas about where he thinks the business should be heading. But the two men will not make a full statement on future strategy until May, when the company's full year results are published. Given the pressures on Sainsbury, the statement will make for interesting reading. Sainsbury has warned that full year profit will be at the bottom end of market expectations because of higher operating costs in the supermarkets business. Like for like sales growth was running at 2% in the third quarter, but it is clearly proving costly business to win. And Philip Dorgan, an analyst with WestLB Panmure, says life will not get any easier: "There is no magic wand to be waved and we are forecasting that profits will fall again this year. "The company has major problems ­ in particular, the wrong position on price. As every day goes by, this becomes a more critical issue with the consumer forcing a radical restructuring of UK retail's margin structure. "Unfortunately for Sainsbury, the consumer now reagards its traditional strengths as being provided better for by other companies, and this will take time to put right." Sir Peter has been here before, of course. "In 1977, Tesco went ahead of us with Green Shield Stamps and then its Checkout programme, and took market leadership," he says. "I was made marketing director and was asked to try to get leadership back. We did with Discount 78. And we held it in all the time I was here." But as the new Sainsbury boss readily accepts, the gap with Tesco will not be closed all that easily this time round. "Tesco is now more firmly ahead, with more stores and bigger stores. To my mind it's not an issue of us being the biggest, we want to be best." Nevertheless, a merger or takeover would be one way for Sainsbury to regain its position as food retailing's number one ­ competition authorities permitting. Sir Peter has built a reputation of being a bit of a dealmaker and is known to be a close friend of Safeway chairman David Webster. Little wonder, therefore, that the rumour mill has been working overtime this week. One rumour that has been quashed ­ at least for the time being ­ is that Sainsbury will be gobbled up by an overseas retailer. The public statement of support for Sir Peter made by the Sainsbury family, the company's largest shareholder, must mean no such deal is in the pipeline. And Sir Peter made it clear he would fight any predatory moves: "I have not joined the company to sell out and I would want to give them a run for their money. There are opportunities to grow Sainsbury and I want to do that." Full details of how he plans to exploit these opportunities will be revealed in May. But it's clear that if Sir Peter is to restore the business to former glories, he will need to perform radical surgery. {{NEWS }}

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