Sainsbury’s chief executive Justin King said the retailer is continuing to invest in its business including new store openings, despite the economic downturn.
Justin King: greatest fear is fear itself
Speaking at the IGD Convention in London last month (October) King said: "Businesses that invest during downturns emerge as stronger businesses."
King told delegates his greatest worry in the present economic climate was fear but added:"With change comes opportunity and it is not necessarily that a crisis in the banking system leads to devastating effects in the real economy."
It was, however, looking increasingly likely and King questioned recent decision making.
"Momentous decisions have been made in short periods of time," he said. "What does worry me is the absence of dissenting voices."
King said the credit crunch had created a massive change in consumer sentiment. "The collective intelligence of consumers has led to dramatic changes in what people are buying," he said.
King told delegates it was vital businesses remained true to their principles in this respect.
"You must stand true to what you stand for and focus on the ‘fast’ word of fmcg."
On a brighter note, King pointed out average household expenditure on food had halved to 10% over the last 20 years and the impact of the credit crunch was not the same across all consumer groups.
"If you are selling something that is deferrable or requires borrowed money there will be completely dramatic changes in consumer expenditure."
King denied Sainsbury’s had been squeezed by its middle ground position.
"It’s allowed us to play tunes – the quality role and the value role really well," he said. Execution was more important than positioning, he added.
"We are well equipped – the reality is customers can do all their shopping in the four walls that are Sainsbury’s, we have universal appeal."
King admitted the hard discounters were having an "incredible run" but boosted by positive pr campaigns.
But he told delegates the 2008 discounter market share was as low it is has ever been and Aldi’s sales densities were in decline. "Their growth has been driven by footage," he said.
On the growth of own label, King said Sainsbury’s latest ‘Switch and Save’ campaign differed from a similar initiative in the early 90s, which knocked brands to push private label.
"This time customers are already making the switch," he said, "and want more help with doing it.
"Value is up the agenda but the price gap between brands and own label is as big as it’s ever been. That gap has widened at a time when consumers are more concerned therefore some brands have been found wanting."
King added brands who innovated, however, had nothing to fear and the growth of own label should be invigorate and challenge them.