Pull up a Chair with Bina Mehta: S3, Ep 9 - Martin Scicluna, Chair, Sainsbury’s

Yeah, I think in all those experiences I learned many lessons. 2008 was clearly an underestimation of risk, especially concentration risk, but it also brought opportunities. People tend to focus on the risks and horrors of crises but ignore the opportunities. I saw many opportunities arise in those sectors. When you're doing well, you underestimate risk; when things are gloomy, you overfocus on risk and miss opportunities. The lesson is to focus on both equally at all times, regardless of the cycle. Today, geopolitical risks are scary because they could upset the world order we've known for 30 years. For a retailer, supply chain issues from tariffs, trade wars, or countries becoming more insular are equally concerning.

Yeah, people are much more aware of risks. Boards have improved at assessing risks, not just focusing on upside. Now management teams come up with plans for sustainable growth, which is on every board's agenda.

Climate change is a fact affecting the supply chain. We need to focus on our consumers and the producers, especially farmers. The past relationship with farmers was about buying as cheaply as possible with short-term contracts. Now we need longer contracts to help them invest and adapt to climate change. Last year, we visited a farm where salads were grown; in summer it was too hot and water evaporated, in winter it flooded. They invested in reservoirs connected to the farms, collecting rain in wet periods and using it in dry periods. But they need long-term commitments from us to make that investment viable.

But you can't do that if you don't know whether Sainsbury's will buy salads from them next year. Long-term contracts enable growers to keep supplying profitably.

The relationship is very different now. It's not about the minimum price per transaction; it's a long-term partnership. We now sign 10-year deals, which enables producers to invest.

When facing big decisions, I often refer to our history. Our predecessors revolutionized from counter service to self-service, so we know we can make big changes. Innovation in food is a current wave—our Taste of Difference brand has been growing 15% per annum. Another shift is working with farmers on 10-year deals. Also, investment in data, like Nectar, is key. Instead of generic ads, we now personalize offers for customers.

We have an 85% participation rate. It's very high for a program started only a few years ago. It delivers loyalty and savings—it's probably saved customers a few billion pounds. In stores, Nectar prices are clearly marked in purple, and we personalize offers, making it even more attractive.

During the cost of living crisis, we had a 'save to invest' program. We made savings at double our previous rate and invested a billion pounds directly into prices. That came from efficiencies elsewhere, not from sustainability or quality budgets. That's our priority.

Price and quality are very important. We offer different levels through brands like Taste of Difference. But from my experience talking to customers, they want us to be as respectful of the planet as possible. Even if it's a minority, it's important, and it's the right thing to do. We all know if we don't take care of the planet, future generations will suffer.

You need a good CEO and management team to balance it daily. We've shown self-help: the billion pound price investment came from savings, not from sustainability. We intend to keep producing good quality food at affordable prices without trashing the planet.

The 40 new stores are the highest investment in a decade, partly to enter new areas and because we're growing market share. But we're also focused on improving existing stores—making more space for food by shifting general merchandise online. That's a big program.

Number one: price. Two: focus on quality food. Three: the intangible—Sainsbury's is seen as a good company to shop at. And Nectar prices have been very helpful.

A good example is using AI to forecast better and reduce food waste.

Food waste happens at three stages: with growers, at retailer, and with consumers. At the retailer level, it's partly due to weather—if you order barbecue supplies and it rains for a month. Forecasting is hard because we source from 80 countries and order well in advance. We work with Neighbourly to distribute surplus food to those in need. If not, it goes to animal feed or anaerobic digestion. The priority is getting food to people who need it.

It's interesting. During World War I, we lost a third of our workforce. We recruited and trained women, which was an innovative response. We've always had good gender balance, especially in customer-facing roles. That culture of deep respect for individuals is embedded in the board and management, and I think that's why we're successful.

Leadership means understanding the company's purpose and vision, being clear on opportunities and risks, and enabling the organization. It's not about me; it's about the 140,000 people who face consumers. It's about encouraging everyone to aim for strategic goals, enabling them to see risks and opportunities properly, challenging the strategy, and executing daily.

I'm not sure I thought I'd still be working now. To my 30-year-old self: calm down. It's more a marathon than a sprint. When you're young, you think everything must be achieved urgently. A better work-life balance would have been good.

Through work partly—I love working at Sainsbury's. It's a great company with purpose, culture, and values. I enjoy being in the office. And I'm an Arsenal supporter; I had a season ticket for 28 years.