Sainsbury’s showed its unequivocal support for bakery when it launched its sector-specific apprentice scheme earlier this year. Much of the retailer’s recent policy has been influenced by its hands-on CEO Justin King, whose interest in the bakery and fresh produce sectors of the multiple are clear.
"There are two parts of the store that stand out in customers’ minds - the produce department and the bakery," he says. "They are absolutely vital if you are setting out your stall - as we are - to be a quality fresh food retailer. Our goal is to exceed customer expectations in fresh, healthy, safe and tasty food. Nothing delivers against that better than produce and bakery, partly because they are both high-frequency purchase items."
This forms part of his plan to "make Sainsbury’s great again". When King joined the company he says the supply chain clearly wasn’t working, it had stopped competing in the market on price and there was navel-gazing on whether its middle market position was the correct place to be.
"Part of any chief executive’s role is to rally the business to its cause. There was a sense the people were waiting for me to tell them what the business cause was. Three things we had to address were availability, pricing and clarity of what the company stood for."
Back to the floor
King’s approach is very hands on. Every Friday is spent visiting stores, usually unannounced. On the day of my interview, he was planning to work a late shift from 6pm to 2am in a store and said he would be filling shelves, walking the floor and definitely spending some time in the bakery, seeing what challenges exist.
Rather than baking once a day first thing, Sainsbury’s now bakes throughout the day. King clearly feels this is an important response to the way shopping trends are moving - from a weekly shop to more frequent visits to the supermarket.
"We are seeing a shift - people are shopping more regularly and re-engaging with fresh food. There is a rediscovery of fresh food, the variety available and how food tastes different and better when it is fresher. Fresh produce and bakery are the two key areas of the store.
"Half our custom comes after 4pm, so if you’re not baking bread at that time of day, you’re depriving customers of the opportunity to buy it fresh. In our larger stores, we would expect all of the core loaves from our range to have at least one bake after 4pm. If you go into our stores at 8pm, you can buy a fresh French stick or crusty loaf baked at perhaps 6pm. That has been a really important part of the process. By delivering that fresh product later on in the day, we’ve made our sales rocket."
King points to the fact that bread baking is incredibly visual and the smell extremely evocative. "I wouldn’t in any way dismiss plant bread as it forms an important part of the overall mix and there has been some tremendous innovation in the sector over the last few years - such as trying to get more wholegrain back into bread and reducing salt. But we’re trying to take advantage of the fact that we have the ability to make fresh bread in-store."
He says there’s no point having in-store bakeries that make products similar to those of the plant bakers. "Our in-store bakeries contribute a number of things. Seeing people actually producing the bread has an impact on people’s view - not just of the bread sector but of the whole store. Also the smell of bread drifting across the store is perceived as welcoming. Baking bread is one of the few craft skills one now sees in a grocery store. You don’t often see a butcher cutting a piece of meat or a fishmonger filleting a fish. In reality, most people buy meat or fish pre-prepared. With bread, though, you can stand in front of a bakery at almost any time of day and see the bread being baked."
The current health agenda is very much in King’s sights - in the in-store bakeries as well as in food in general. "There is massive progress that has been made on salt reduction," he says. "We have generally achieved the government’s 2011 target in its five key areas. Then we have removed hydrogenated fats from all of our Taste the Difference products. It came out of all of our breads and, by the end of February, we should have removed hydrogenated fats as an added ingredient from all of Sainsbury’s products. Customers don’t necessarily notice this background work, but it has an impact on their overall long-term health and well-being."
The much more visible move Sainsbury’s has made is with its Wheel of Health labelling on products, which highlights nutritional content using colours to signify if a product has a high, medium or low content of certain ingredients.
"We launched it at the start of 2005," says King. "In common with all retailers and a few suppliers, we were engaged with the Food Standards Agency back in 2004 when it started the debate about how health labelling and products could be improved. Very early on, it was clear that there were two points of view - those who believed front-of-pack labelling should happen and those who believed it shouldn’t happen at all. Also, there were those in favour of traffic light labelling and others for guideline daily amounts.
"Our customers told us very clearly that GDAs are already on the back of packaging and were useful. But they also said the real challenge came when they had to make a decision at the shelf edge and that traffic light labelling would help."
train to win
As Sainsbury’s bakery apprentice scheme demonstrates, educating young people about food and giving them a career opportunity in the sector is important to the retailer.
King says he feels aware that bakery as a career is an industry responsibility, first and foremost. "I don’t hold truck with business people bleating about the situation, saying something must be done and the government must do it. If we, as an industry, and as a supermarket, wish to bake bread in our stores - which we do because that’s what our customers want - we have a responsibility to do our bit for training. That’s the nature of a free market economy. The reason we got to the state we were in is because, for a long time, there was a slow, steady decline in craft bakery skills in our stores. We were as guilty of allowing that as others.
"Our bakery apprentice scheme is only a scratch on the surface, but we’ve been hugely enthused by the response we’ve got. People have started to wake up to the fact that bakery has the potential to be a lifelong and fulfilling career."
Having said that, King feels the government does have a part to play in providing appropriate incentives to sit behind apprenticeship schemes. "One of the things we’re concerned about is that government funding to support apprenticeship schemes stops at the age of 25; we think that’s a real mistake. The government needs to move to a position of lifetime learning. It’s taken a stance of trying to give people a start in life and that’s fantastic, but with the new age discrimination law, you wonder whether the government’s current policy on apprenticeship projects can survive."
The point, he says, is that many people are likely to start a new career several times in their lives. "At 40, for example, you’re still likely to have at least 25 productive years left. So why on earth wouldn’t you want to retrain as a baker aged, 40, 50 or 60?
Education on food at a young age is, feels King, contributory to young people coming into bakery. "There used to be an unfashionable subject called home economics on the school curriculum, where you made flapjacks, pizzas and other things but you did learn some basic stuff. How on earth did we get to a place where we felt it wasn’t part of a normal education for a child between the ages of 4-16 to be taught a basic understanding of food; how to cook it, how to eat healthily."
King believes the issues that Sainsbury’s and the baking industry should stand up and be counted on are: the availability of people to bake bread, ensuring that bakery is articulated as a fantastic career; a focus on freshness and quality, as the over-arching trend that people will eat less food of higher quality; plus the aspects of health and innovation around salt, fibre and fat.
These are the key issues on which he is already driving Sainsbury’s bakery business forward and, as a model for the industry at large, it’s one to watch.
=== The route to becoming Sainsbury’s CEO ===
I suppose if you sat down and wrote a CV for the prospective chief executive of Sainsbury’s, it would look pretty much like mine," says King. "You’d want someone who had worked for both retailers and manufacturers and someone who’d had a pretty varied experience in the supply chain, in terms of working in manufacturing, marketing, sales and in shops. And, because of the challenges faced by Sainsbury’s at the time, you’d want someone with good experience of both the value side of the equation , which I have from working with Asda, and the quality side, which I gained from working at M&S and various branded companies."
The retailers’ non-executive directors recruited King to Sainsbury’s. Their biggest concern at the time, he reveals, was whether Sainsbury’s could be successful in the middle ground it occupied or whether it needed to move itself more upmarket or much more downmarket to solve the problems it faced. "I held very strong views that the so-called middle ground was actually where most consumers are most of the time," says King. "They want to feel they can buy their shopping at a fair price, but also buy something a little better when they can afford it. And they don’t want to feel they are skimping unnecessarily. It seemed to me that positioning wasn’t the problem, so much as the execution. That’s what I told the board and that played a big part in why they offered me the job. This ultimately formed the backbone of our recovery plans."
=== Baking in the blood ===
Not everyone may realise that baking forms part of Sainsbury’s CEO Justin King’s family background. His maternal grandparents were bakers and he has distant memories of the business - a chain of five stores called Dugdale & Adams in central London.
King himself only remembers one store, his great uncle’s. "Family legend has it that my grandfather was one of five sons in the family and they each had a store when their father, my great grandfather, retired from the business. The one I remember was in Gerrard Street in Soho. We used to stay above it regularly when we visited London because it was slap bang in the middle of Chinatown. It had a very eclectic range as its location meant it served a huge variety of businesses, ranging from West End hotels through to more ethnic businesses, with many small batches of strange and multi-coloured loaves. It was a sandwich shop with a bakery and delivery business; they used to shoot off at 4am in the morning to deliver to all the main hotels in time for breakfast."
King’s own grandfather’s store was sold in the early 1960s. But he has keen memories of his grandfather. "I don’t think he ever bought a loaf of bread in his life. When we stayed at his house, there was always bread at some stage in the making; either he was making the dough or it was proving. So at the age of around five or six, my grandfather taught me how to make bread. I have to admit I’m not sure I could make a loaf of bread now, although I did retrain at Asda.
"My grandfather worked well into his mid-80s," adds King. "He retired to the south coast but worked for a multiple bakery chain called Pegrums in Worthing. He was financial director there and was still going in one or two days a week until his later years. I think he used to go in and tell the bakers they weren’t making good enough bread and make a bit himself!"
King’s work ethos is strong. As one of four brothers, he was raised in a family where industriousness was encouraged and, even at school, he had part-time jobs, doing a paper round and washing cars. But he fights shy of being described an entrepreneur.
"I think it would be an insult to people who are true entrepreneurs and start up their own businesses to call me an entrepreneur, as I’ve always worked in large corporations. But I’ve always tried to bring an entrepreneurial spirit to the jobs I do. That’s about courage, convictions and being prepared to take risks and learn from your mistakes. It’s why children should do competitve sports and other challenges. It gives them drive and the will to win early on. If we remove that from society it will be a monstrous mistake. We won’t grow the same entrepreneurs and leaders that we did in the past.