The former boss of Sainsbury’s has roundly rejected claims that British supermarkets are profiteering during the cost of living crisis, arguing that the government and regulators should focus on helping those in need instead of considering “interfering in markets”.
“This idea that [supermarkets] are somehow profiteering in these circumstances… it doesn’t even pass a basic smell test,” Justin King told City A.M.
Chancellor Jeremy Hunt met with supermarkets last month over concerns about the current cost of living and the Competition and Markets Authority (CMA) has also opened an investigation into whether a lack of competition is contributing to grocery prices being higher than they would be in a well-functioning market.
However, King, who served as the boss of Sainsbury’s for 10 years until stepping down in 2014, said that both Tesco and Sainsbury’s reported a decline in their profit margins in their most recent financial results.
“There is no profiteering,” King said. “It is not grounded in the reality of publicly available and reported numbers.”
“I would encourage the CMA not to respond to the political conversation and focus on the facts, which is what their job is supposed to be,” he said.
Grocery price inflation eased slightly yesterday, but still came in at 16.5 per cent for the four weeks to June 11.
While many supermarkets have cut prices on certain key items, the government previously discussed the idea of voluntary price limits for basic food items – an opt-in scheme that requires shops to charge the lowest possible price for kitchen essentials such as bread and milk.
King said the proposal, which supermarkets rejected, was dropped as it was a “truly silly idea”.
“These are not the things the government should be doing,” he said. “Helping those in most need is what the government should be doing.”
“I’ve said consistently, the government should not try to interfere in markets. It actually can’t do that successfully,” he said.
In response to the remarks a CMA spokesperson said: “As the cost of living continues to rise, it is our responsibility to make sure that market conditions aren’t making things worse.
“This is exactly why we stepped up our work on grocery prices – to make sure that weak competition isn’t adding to the problems people are currently facing. As always, we will conduct an evidence-based assessment.”
Since leaving the supermarket, King has turned his focus to the technology space, where he is currently a major investor in, and advisor to, food delivery app Snappy Shopper.
Snappy Shopper, which hopes to rival the likes of Deliveroo and Gorillas, recently recorded 50 per cent growth year-on-year and completed 5.5 million orders during the year.
“We are growing organically,” King said, with the business still focusing on expanding in the Scottish and the north of England, not yet having a presence in London.
He concluded: “We’re building the business for the long term and we think 50 per cent is a good rate of growth for now.”