London’s King’s Cross is known for many things, most of them unsavoury. But the prostitutes and drug dealers will soon be joined by Sainsbury’s head office staff after the company announced yesterday it was relocating its headquarters – sorry, store support centre – there.
It may be little more than a mile from Holborn Circus to King’s Cross, but that won’t have prevented the moans from those who will have to switch from dodging sharp suits to stepping over syringes when the move occurs in 2011.
Of course, there is sound business logic behind the move and the plans to redevelop King’s Cross should transform the area so that, by the time Sainsbury’s arrives, it should be a much nicer place. The reality is that, in these cost-conscious times, there is no reason why any major grocer needs to have its head office in the heart of London’s business district.
By chief executive Justin King’s own admission, Sainsbury’s hasn’t been very good at property over the past decade. The main manifestation of this has been the way in which Tesco has been allowed to shoot ahead in building a giant landbank for new stores, but its own headquarters strategy has been equally muddled.
Remember the initial plan was to redevelop its historic Stamford Street site, which has now lain derelict for almost a decade? Instead, the supermarket chose one of London’s most lavish office buildings, which had been rejected as too expensive by those frugal City institutions Accenture and Goldman Sachs.
But given the margins grocers work off, there is no logic in being based at such an expensive location and Justin King has done the sensible thing. Sainsbury’s is London’s grocer and it couldn’t leave the capital, so moving to a lower-rented location makes sense.
The only risk – apart from staff getting mugged – is that, if King’s Cross does take off, the rents could rise to the extent that Sainsbury’s might need to move again in ten years’ time. However, the company will have been sure to get a good deal to be the first major tenant into such a high-profile regeneration scheme.
The staff at Holborn might not like it, but King will have an easy riposte – King’s Cross might be bad, but it’s a sight better than Cheshunt.
Our thoughts go out to Richard Ratner
Retail is all about characters and there are few bigger than Seymour Pierce’s veteran analyst Richard Ratner, who suffered a heart attack on Wednesday. We at Retail Week, along with the rest of the industry, wish Ratty a swift return to full health.
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