Even picture editors sensed Philip Clarke’s mortality: the beleaguered Tesco CEO always seemed to be pictured wearing resigned expression resembling the hapless Oliver Hardy as he got into mess after mess after mess.
Clarke received so many hospital passes on his elevation to the CEO role (and worked so hard to revive Tesco), it’s a miracle he’s not in intensive care. And it’s no surprise he expressed relief it’s all over amid concerns from friends and family over his health. He was thrown into the role like a gladiator. He wasn’t groomed to face the City (like, say, Mike Coupe). When he was presented as Sir Terry’s successor, it wasn’t seen as a logical choice. Analysts and insiders alike expressed surprise. It was a bolt out of the blue. As much for Philip as anyone, one suspects.
He was landed in it quite literally: Sir Terry was still investing heavily in the space race, despite all those Tescotowns, and the growth of online retail, when he appointed Clarke. A brave, prescient CEO would have called a halt immediately. And critics have also attacked FD Laurie McIlwee for not alerting him to the diminishing returns on Tesco’s investment in new builds. But Clarke was too busy flying around the world, in the run-up to his appointment, to be able to take a grand strategic view of the business and the market. He was living the detail, not the big picture.
Then there were the messes to clear up in California, Japan and China. Plus political upheavals and flooding in Thailand, a legislative volte-face in South Korea, and horrid economic conditions in Ireland and Central Europe. But the biggest assault was to the UK business. It had been under attack for years from a resurgent pack, not to mention Primark, Poundland, Amazon etc. And suddenly, Aldi and Lidl’s stuttering gunfire turned into a remorseless barrage. With almost double the number of big sheds as all its rivals put together, and fuel costs continuing to rise, Tesco was always going to bear the brunt of the biggest structural change in the market in 60 years.
That’s not to say Clarke hasn’t been at fault. He put a lot of store in-store, investing £1bn in his tired, unloved estate. Patently, it did not work. Or maybe he didn’t strike upon the right formula until it was too late. Improvements to the Value and particularly the superb Finest range also failed to lift sales, as this week’s profit warning proved resoundingly.
Above all, he didn’t take the discounters, or price, seriously enough. Indeed Tesco is STILL not. Less than a month ago, a senior exec told me “price is not what we are about.” Where did it say, in the reams of Tesco Clubcard data, that it was acceptable to be 6% dearer than Asda on branded items? And if Clubcard is so powerful, how come it didn’t spot the rise of the discounters?
Tesco lost its plucky underdog status, the Avis-style ‘we try harder’ mantra that had served it so well, some time ago. And if Sir Terry’s ‘Steering Wheel’ of values seemed complex, how must insiders have felt about Clarke’s whirlwind of ideas? A hive of energy and intent, the strategy was best characterised as plural. Perhaps a better word would be confusing.
“Clarke received so many hospital passes on his elevation to the CEO role, it’s a miracle he’s not in intensive care”
Adam Leyland, Editor
It must have been exciting - in a hair-raising rollercoaster ride fashion - working at Tesco these past three years, as Clarke took on allcomers. One minute it was foodservice, the next he was reinventing Tesco as a tech hothouse as it launched its own tablet (the Hudl) and acquired digital download service Blinkbox. It’s also set to launch a mobile phone.
Impressive as these initiatives all are, individually, and laudable as it was to create a culture of creativity, Tesco is not Google, and for all the smart people in its Silicon Roundabout location (and elsewhere), “every little” in this case failed to “help” provide clarity within the business.
Now Dave Lewis is in the hotseat. Let’s hope Unilever’s likeable and smart president of personal care is better prepared than Clarke was for the scrutiny from the City and the media alike. On the one hand there are countless examples of executives who have switched sides successfully, including Justin King, Andy Bond and Marc Bolland. On the other hand, it’s a brave move to put a man without retail experience in charge of such a big, sore-headed and high-profile beast.
One of the most pressing questions to be resolved over the next few months is whether the man who launched Dove in the UK turns into a Hawk at Tesco. I was responsible for christening Lewis ‘Drastic’ Dave following a series of cuts and restructuring at a patently slow-moving and bureaucratic Unilever. How drastic will he be? With redundancies already at Asda and Morrisons, senior store ops staff will be feeling uneasy and nervous about their future.
And Lewis won’t have all the answers. In a presentation at the IGD in 2007, he explained how Flora margarine was a better answer to butter in the war against obesity. The implication being that Unilever’s margarine brand would win the day against the dairy-based spreads. He certainly called that one wrong.
Lewis is not afraid to make mistakes. “I don’t mind if some of the things I try don’t work,” Lewis told The Grocer when he was guest editor in 2010. “I don’t think my customers would worry either. They only worry when I keep going and going when it doesn’t work.”
The question is: what will work? And what will work quickly enough to get noticed by enough customers, and keep the City and the media at bay?
He can’t reinvent Tesco as a discounter. Creating an EDLC culture overnight is impossible. And transforming 242 hypermarkets into destinations is a massive challenge, even for a man as capable and brand savvy as Dave Lewis. He has been described as a man of singular purpose. The trouble is, with problems on so many fronts, how does he avoid Clarke’s temptation to fight them all at once?