Concentrate on the big prizes: “I don’t mind if some of the things I try don’t work,” Dave Lewis told The Grocer as 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 phrase could feature on Philip Clarke’s epitaph but this week, after consistently backing his beleaguered CEO in the face of increasing criticism, chairman Sir Richard Broadbent brought an abrupt halt to Clarke’s three-year term, and has brought in Lewis as CEO in October. It’s a controversial appointment as Lewis has no experience to speak of in retail. But if there’s one thing everyone was agreed on, it’s that Clarke’s plan wasn’t working.

“Clarke ended up fighting on so many fronts it became a huge problem,” says one former supermarket CEO. “When times are tough you need your eyes on the big prize. Initiatives like Giraffe, H+H, Hudl, Blinkbox are all good stuff but they are not going to turn the dial.”

Lewis’s track record suggests he will not make the same mistake. The Grocer dubbed him ‘Drastic Dave’ when he axed 300 jobs in 2007 as UK &Ireland chair, going on to halve the number of SKUs. “If you look at what Unilever have done so brilliantly, it’s all about simplifying,” says the former CEO. “Lewis will stop doing a lot of stuff that doesn’t add value.”

Adds a former Unilever exec: “Dave’s approach will be much more strategic than Clarke’s.” “You don’t reach his position without that Unilever approach. It’s all about understanding the big picture, looking out for the big trends.”

Kantar Retail analyst Bryan Roberts sees “a lot of merit to Clarke’s UK strategies - convenience, digital and London are probably the highlights - but these measures were clearly not turning into growth.

“There were manifold little improvements being made across the business, rather than several big bets that might have been more transformative.”

Oliver Wyncoll, partner at Bridges Ventures, describes Lewis as “very forceful, a determined operator, and his own man, which is somewhat unusual for Unilever,” he claims. “But crucially he has that clear understanding of the consumer. He is a marketeer through and through and if you look at Tesco that’s where it has fallen down.”

Bolster senior management team but avoid night of the long knives? New Tesco finance chief Alan Stewart is on gardening leave from M&S for six months, but some expect other top level recruits to follow.

“We expect further adjustments to Tesco’s executive team in time and maybe considerable reconfiguration of the group and executive boards,” says Shore Capital analyst Clive Black, who believes criticism needs to extend further than just Clarke. A retail consultant adds: “I think Lewis will restructure the Tesco board and quite a few of the senior team will go. It could end up as a bit of a night of the long knives.

“There is bitterness among some senior people at Tesco that Clarke surrounded himself with his old cronies,” he adds. “It’s also been very autocratic.”

Roberts warns Lewis not to leave too much blood on the carpet. “The level of churn in Cheshunt has been remarkable,” says Roberts. “Hopefully this new era will be one of stability and longevity. The last thing Tesco needs is more boardroom turbulence.

Improve morale on the shop floor: It’s not just the C-Suite team Lewis has to make important decisions about. There have been signs that morale on the shop floor is also not as it should be. “He needs to invest in people and hours,” says Roberts. “Morale is low and execution patchy. Lewis needs to return autonomy to store managers and reduce over-centralised management.”

Black goes further, claiming morale in Tesco stores has “collapsed” with store staff feeling “pummelled”, despite Clarke’s promise to transform service and training.

When the Grocer ran a story in March about Tesco plans to axe team leaders it attracted nearly 400 comments, most from furious staff angry at their working relationships with bosses.


Turn his Achilles heel into an advantage: Coming from a consumer goods titan Lewis’s lack of retail leadership is his most obvious Achilles heel. “If you look at Unilever, it is very, very siloed,” says the former retail CEO. “Unilever is obviously outstanding at what it does but it’s a very different business.”

Adds the consultant: “He’s never run a company, let alone a FTSE 100 one despite his obvious talent.”

Yet Lewis’ route in is not as unique as some suggest. Morrisons replaced its founder with Marc Bolland, a former Heineken marketer who successfully turned its fortunes around before being poached by M&S.

“Look at Justin King and Allan Leighton, who both came out of the Mars stable,” adds a supplier source. “It’s been done before.”

Lewis’ experience in forging strategic partnerships with companies - including Tesco - could turn into an advantage, some believe. For the past two years Tesco UK MD Chris Bush and UK commercial director John Scouler have been trying to build a more strategic relationship with suppliers. Lewis has a strong track record from the other camp. “I had very frank conversations with retailers three years ago and very few of them were that complimentary,” Lewis told The Grocer when he was guest editor at the end of his stint in the UK. “But if you asked the key retailers now you’d get a completely different feel about how engaged Unilever is, how applied we are in terms of our thinking to their business.” Now he has to show he can do the same in reverse.

Focus on getting the value for money proposition right, not an all-out price war: Weeks before saying au revoir to Clarke, Tesco chairman Sir Richard Broadbent told its agm that an all-out price war would be a “strategy for decline.” Lewis’ focus is likely to be on improving the consumer’s sense of value for money. “When you are the biggest a price war is going to cost you the most,” says the former supermarket CEO.

Wyncoll thinks he will be “ruthless on cutting costs. We could quickly see some rationalisation within the business. But I think he’ll focus on value, not necessarily price.

“Lewis mustn’t try and beat the discounters at their own game,” adds Roberts. “It’s an unwinnable war. Take a leaf from Mark Price at Waitrose and try and be everything the discounters can’t be.”

Roberts says a good start would be to tackle Tesco’s still confusing promotional strategy, despite Clarke having said for two years this was on his hitlist. “Lewis needs to actually do this. A store visit to Tesco this weekend revealed Carlsberg lager at 20 for £15, 24 for £13 and 30 for £16.” Black claims Tesco’s entire loyalty and promotions strategy could be in question, even, whisper it, Clubcard. “A material change in UK trading strategy cannot be dismissed,” he says. “Will Lewis keep Clubcard, Fuel Save, Price Promise and all the other initiatives through which Tesco seeks to extol its value credentials to such poor recent effect?

Roberts says Clubcard is still a huge advantage but believes Tesco has become “over reliant” on Dunnhumby data. “It is leading to some odd ranging decisions.”

What is Tesco’s X factor?

Lewis oversaw Dove’s launch in the UK in 1992 with the famous ‘Love your body’ strapline. Now he has the bigger task of getting people to love Tesco again.

“Tesco needs a call to action to its customers, which I would say it hasn’t had for six years,” says the former supermarket boss. “They have to try to find a little bit of magic – the X factor. I think the board clearly came to the conclusion their operations and logistics are absolutely fine. They have a real sense of purpose in that but have a huge brand problem and product ranging issues and these are the skills Lewis brings.”

“I’m sure you will see a huge change in Tesco’s marketing and it will all be about how they can re-establish a relationship with consumers,” says Andrew Marsden, a marketing consultant. “Far too much of its marketing has been about prices, which isn’t how Tesco is going to achieve that.”

One leading retail consultant also thinks the biggest change will be in Tesco’s brand position.

“Ever since the change to W+K, one of the most successful creative agencies in the world, we have been expecting Tesco to try to carve out a new brand strategy but the approach just seems to have been very much like the old one. The marketing has been very tactical, rather than strategic.”

Review store strategy: Clarke admitted to The Grocer just a few weeks ago that he had been shocked at how wrong his impression of the job proved to be when it came to rolling out new stores.

“When I came in it was all about being the biggest and getting even bigger and I thought it would be just more of the same but faster,” he said.One of Lewis’ biggest decisions will be whether to continue with the huge transformation of Tesco’s big sheds, with over half its stores over 50,000 sq ft. In the short term, at least, they are sucking up money and dragging on profits. Some suggest he may think again. “The fundamental issue remains that shoppers are no longer making that big weekly trip to an out-of-town superstore,” says Natalie Berg, global research director at Planet Retail. “A change in leadership may bring some much-needed fresh thinking but the structural shifts in the grocery sector cannot be reversed. Lewis will need to reposition Tesco to adapt to this new norm.”

Writing in the Wall Street Journal, Sanford C Bernstein argues for a radical overhaul, with Tesco remodelling stores to create three formats: value, midmarket and high-end.

Others point to what is already happening in London, where Tesco has been pioneering the transformation of stores to suit their specific customer base, some within a few hundred metres of each other. “Lewis needs to continue the Extra and Express refresh programme,” claims Roberts. “But he should use learnings from London, where strategy and execution have been excellent, around the rest of the country.”

Drive the health and environmental agenda: Lewis, along with former health secretary Andrew Lansley, was effectively the architect of the government’s health Responsibility Deal, having chaired the Public Health Commission that created the blueprint. Lewis said at the time the people around that table agreed on 98% of the issues but that progress was being put at risk due to squabbles over the remaining 2%. This may be just the sort of leadership the Deal needs again as it has looked perilously close to collapse of late, although Lewis and Tesco may be more tempted to plough their own furrow and give Tesco what a few years ago would have been an unlikely point of difference to its rivals as the leader on health. It has already gained plaudits in recent months for moves including its binning of guilt lanes and sweeping reductions on sugar across the soft drinks aisle, and with Lewis at the helm more could be to come.

“I think he’ll drive the health agenda even more for Tesco,” says Wyncoll. “And coming from Unilever I think he could drive the sustainability agenda too.”

Tesco has already upped its PR on green issues, including a bold decision to come clean on supermarket waste, while Unilever is widely regarded as an evangelist on green issues.