The last-minute cancellation of his “40 years at Tesco” party suggests that Philip Clarke’s departure came as a big surprise. But in truth, his future at Tesco had been looking increasingly bleak for months. The man himself conceded as much in March, with his surprise statement at a conference that his days as chief executive were probably numbered.
To be fair to Clarke, when he took the top job in 2011, replacing Sir Terry Leahy, he also took a hearty gulp from a poisoned chalice. The company’s recent results have seen him spasm and finally fall as the toxins took hold. The major factor in his downfall has to be that effecting change at such a gargantuan company as Tesco is seldom quick or easy. While its size and diversification protect it from market forces that could crush smaller rivals, they also inevitably hamper its ability to react quickly.
As the first outsider to take on the top job at the retailer in its history, Clarke’s successor Dave Lewis, formerly of Unilever, will have to work hard to ensure Tesco’s lifers embrace his vision. While there are dangers to this style of change management, the benefits can prove to be impressive, as seen when Justin King came in and radically transformed Sainsbury’s.
And aside from ensuring it doesn’t repeat the costly errors made in the US under Leahy, Tesco must clarify its position on pricing to combat the more aggressive discounters such as Aldi, and to a lesser degree Asda and Morrisons. Lewis must show that Tesco is serious about becoming a real competitor in the market again. He may not have direct retailing experience, but as a leading supplier, he certainly knows how to win price wars. And perhaps that is the gravest issue now facing Tesco in the UK.
But I suspect this will be just the first stepping stone for Lewis, also known as “Drastic Dave”, followed swiftly by trying to rediscover Tesco’s USP by communicating and engaging closely with its customer base. The shopping public has not shown its love for the retailer for a long time, and the brand must look wistfully at the goodwill enjoyed by rivals like Waitrose and M&S.
Once Tesco has gauged what the consumer is aspiring to, it needs to put together a distinct marketing campaign to recreate the identity of the Tesco brand that is fresh, in keeping with the modern consumer, and completely integrated – again something that has been missing in the Clarke era. This must capture the hearts and minds of the consumer through better events and promotions, without resorting to cheap gimmicks.
Lewis will also have to reinvent and instill confidence in his team through a clear management strategy. While several leading lights have left Tesco in recent years, the remaining talent has been badly bruised and will need a nurturing arm put around them. The recent poaching of M&S’s finance director Alan Stewart will definitely help steady the ship.
The next three months have to be about settling the business jitters by keeping the lid on and the pressure off. In the long term, Lewis needs to exercise patience and implement gradual change to ensure Tesco’s success is sustainable. A knee-jerk U-turn to satisfy the immediate demand for change could prove costly in the long term and make his tenure a short one.