Food crisis: Sainsbury’s ex-boss Justin King on Covid-19, shares and shoppers

TL;DR

Supermarkets face challenges, but supply chains are coping well; dividends stable, shares rising; omnichannel stores thriving.

Transcript

hello I'm joined today by Justin King the former chief executive of supermarket giant Sainsbury's base now an advisor to supermarket income REIT I'm also joined by Steve Windsor and he's a former finance and risk expert Goldman Sachs and now an investment adviser to supermarket income REIT now we find ourselves in a very unusual sort of circumstanc... Read More

Key Insights

• ⛓️ Supermarket supply chains are managing increased demand effectively.
• ❓ Dividends and share prices of supermarkets remain stable.
• 🧘 Omnichannel stores like Tesco, Sainsbury's, and Asda are positioned to benefit during the pandemic.
• 🏪 Online grocery delivery capacity is limited, with in-store shopping still dominant.
• 🏪 The supermarket income REIT focuses on omnichannel stores, benefiting from the current market conditions.
• 🙃 Retail assets owned by the REIT are well-positioned for the shifts in consumer behavior.
• 🏪 Increased grocery spending is happening predominantly in-store, highlighting the importance of omni-channel stores.

Questions & Answers

Q: How are supermarket supply chains dealing with the increased demand during the lockdown?

Supermarket supply chains are coping well with increased demand despite initial challenges. The system is playing catch-up as purchasing behavior returns to normal, and cooperation with suppliers is helping to manage supply effectively.

Q: Will supermarkets run out of supplies amidst the lockdown?

There is no imminent danger of supermarkets running out of supplies. While there may be shortages of specific items like toilet paper and hand sanitizer, fair purchase policies and improved productivity are managing the situation effectively.

Q: What factors contribute to the rise in supermarket share prices during the lockdown?

Supermarkets see a one-off profit boost due to increased sales and reduced waste. Shifts from the food service sector to grocery retail indicate a potential long-term trend benefiting supermarkets financially.

Q: How are omnichannel stores like Tesco, Sainsbury's, and Asda positioned to thrive during the pandemic?

Omnichannel stores with in-store pick operations are best poised for success. Tesco benefits from its wide-reaching network, Sainsbury's excels in food and non-food offerings, and Asda thrives due to its size and store network.

Summary & Key Takeaways

• Former Sainsbury's CEO and an investment adviser discuss supermarket challenges during lockdown.

• Supply chains are coping, but increased demand poses short-term challenges.

• Omnichannel stores benefit from the shift in consumer behavior, with dividends and shares remaining stable.