Sainsbury’s Argos brand chief executive John Rogers is stepping down from his role, to be replaced by two existing members of its senior team. Retail Week analyses what that means for the business.

The news that Argos boss Rogers would be stepping down from his role at the end of October, to join international advertising and PR agency WPP, was a bolt from the blue.

Sainsbury’s group chief executive Mike Coupe said that Rogers had “made an outstanding contribution to the business” and, after 14 years of service, leaves “with best wishes for the future”.

For his part, Rogers said the new role was “too good to miss”.

“The decision not to directly replace Rogers at Argos could well be an indication of Sainsbury’s plans to accelerate the integration of the business”

However, the announcement sent shockwaves through the industry, as many viewed Rogers as the natural successor to Coupe.

Last week, at Sainsbury’s Capital Markets Day, Coupe and the Sainsbury’s senior management team set out their collective vision for the retailer over the next five years, including the closure of a further 60 to 70 standalone Argos branches that will be relocated into Sainsbury’s supermarkets instead.

One Sainsbury’s director was conspicuously absent that day – Rogers. 

His role, for the time being at least, will now disappear because he won’t be replaced directly.

Instead, his responsibilities will be split between two existing members of Sainsbury’s operational board – operations director Simon Roberts, who will look after the operational and logistics side at Argos, and Paul Mills-Hicks, commercial director, who will manage Argos’ commercial arm.

Big shoes to fill

John rogers1

John Rogers

Rogers leaves very big shoes to fill.

He first joined Sainsbury’s in 2005 and joined the operational board in 2010 as chief financial officer. In 2016, when the grocer completed the acquisition of Argos, Rogers was promoted to run the newly bought business.

A senior source in retail recruitment says that the internal promotions of Roberts and Mills-Hicks are representative of “an organisation that needs to thin its management structure”, following the failed Asda merger, with an eye on delivering better economies of scale and efficiencies from top to bottom. 

On Rogers’ successors, the source says that both Roberts and Mills-Hicks will bring different skills to their respective roles. 

“Simon has got general management experience in his background. At Boots, he was managing director for one of its business units. In that way, if at some point Sainsbury’s want to bring Argos back out or put somebody into the wider structure as Argos managing director, he’s equipped to handle that,” he says. 

“Paul’s a reliable individual, who has been with the business for many years. He’s progressed through Sainsbury’s commercial functions and this feels like a natural step up for him to take responsibility across the commercial arm, including general merchandise at Argos.” 

Both Mills-Hicks and Roberts were given their chance to impress at the recent Capital Markets Day, highlighting some of the work that they had been responsible for over the last year or so. 

Mills-Hicks, in his role as commercial director, highlighted some of the work that his team has been doing when it comes to Sainsbury’s entry-level Basics brand. The grocer is in the process of improving this offer, and is rolling out 13 brands to give the range a “much more compelling credit for the products and the quality and value that they offer”, he said.

Roberts, meanwhile, was tasked with discussing Sainsbury’s evolution of its store operating model; with a particular focus on reducing the cost required to serve customers in-store and – as it turns out, presciently – bringing Argos and other brands such as Habitat together into Sainsbury’s wider general merchandise function. 

While Roberts and Mills-Hicks may represent a safe pair of hands, the decision not to directly replace Rogers at Argos could well be an indication of Sainsbury’s plans to accelerate the integration of the business.

Greater Argos integration

Argos Sainsburys

The shake-up could indicate a greater integration of Sainsbury’s and Argos’ operations

Grocery retail analyst at GlobalData, Thomas Brereton, says Sainsbury’s will take the opportunity to streamline and cut costs by bringing Argos fully into its supermarkets.

“Sainsbury’s are basically looking at this different operation and have concluded that it’s going to have to integrate it. I wouldn’t be surprised if John Rogers wasn’t ever directly replaced,” he says.

“It would have been quite easy for Sainsbury’s to say we’re going to cut a number of these Argos stores, the same way we’ve seen Tesco look to scale back their store estate a few months ago. But they haven’t done that, they’ve decided to just ramp up the integration instead.”

While Brereton expects that the change will have some “short-term impact” on Argos, he believes it won’t take too long for things to smooth themselves out.

“Well, I think in the short term, it’ll cause some disruption. Probably immediate disruption, but I think it’ll work itself out pretty quickly. In terms of day-to-day, following this shake-up, they need to find a bit of stability.”

Shore Capital’s Clive Black says the process of bringing Argos under a single management team has begun.

“It’s already happening,” he said. “The two businesses have now got a common back office, and a lot of Argos units being opened and integrated into Sainsbury’s shops.”

The retail recruitment source says he would not be surprised if Sainsbury’s began to make some redundancies across its buying and merchandising teams over the next 12 months. “It wouldn’t make sense, in an integrated business, to have two pans buyers, or two white goods buyers,” he argues. 

Jockeying for the top job?

While it makes sense for Sainsbury’s to generate synergies with Argos, some have speculated that Rogers’ departure is linked to the fact that he was seen as the natural heir to boss Mike Coupe.

Coupe’s future at Sainsbury’s had been the subject of speculation, particularly after the failed Asda merger. However, the grocer has been at pains since to stand by its man. At the most recent Capital Markets Day, Coupe stressed he was committed to driving the business forward, though some believe succession over the next year or so is likely. 

Shore Capital’s Black believes Rogers’ decision to go may mean that Sainsbury’s will let Coupe decide the time and place for his departure. “Mike’s in the driving seat,” he says. While Coupe may well be in post this time next year, Sainsbury’s is in a period of flux. 

“If the Sainsbury’s top job isn’t available, it’s clear he’s moving on”

Clive Black, Shore Capital

As for Rogers’ move, Black says: “He has been a great chief executive of Argos, he was a great finance director and has worked on the property arm. He was the complete package. John is ambitious, wants to do something different and, if the Sainsbury’s top job isn’t available, it’s clear he’s moving on.”

With Rogers gone, the next logical successor to Coupe may well now be finance boss Kevin O’Byrne, who has been charged with cutting costs to meet the gargantuan £1bn savings to customers that Sainsbury’s claims it would have delivered had the Asda merger gone through.

O’Byrne has already stripped hundreds of millions out of the business and is now looking to find a further £500m over the next five years. 

However, given the recent developments at its biggest competitor Tesco, it may well be the case that Sainsbury’s will look outside of its senior team to find Coupe’s eventual successor.

The retail recruitment source agrees, saying Rogers may have been told that shareholders wanted an outside hire “with heavyweight chief executive experience” to ease the pressure post-failed merger. 

While all agree Sainsbury’s has lost a valuable leader in Rogers, it would appear it sees a brighter future for Argos being more closely embedded into the main arm of the business. What that ultimately means for Coupe remains to be seen.