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Comment: Hunt begins for a more caring Tesco

Tesco in Fraserburgh. Picture: TSPL

Tesco in Fraserburgh. Picture: TSPL

  • by STEPHEN JARDINE
 

THE phone rings. On the other end, a headhunter offers you a new job running a major British supermarket. For a moment, you are excited. Then you realise, the position is with Tesco.

Last week Dave Lewis overcame any misgivings to quit Unilever and take over as the new Tesco chief executive.

What might have helped was seeing his predecessor Philip Clarke quit with a payoff worth £10 million, despite having presided over a disastrous episode in the company’s fortunes.

Sales have been declining for the past three years but last week’s latest profit warning proved to be the final straw.

Even that was probably on a 3-for-2 deal but it still wasn’t enough to save Clarke from the axe. His demise coincided with the death of the man who is largely responsible for the problems Tesco faces. Karl Albrecht was one of the two brothers who founded the Aldi German discount chain and pulled the rug from under traditional British supermarket retailers.

Tesco have been the biggest casualty of the change. They took their customers for granted, assuming that just opening a store and forcing local retailers out of business would be enough to build brand loyalty.

When the company became mired in the “Horsegate scandal”, lots of consumers simply decided they’d had enough. So can Tesco pull itself out of the spiral of decline?

If anyone can find an escape route it is the new man in charge. Dave Lewis comes from an impressive marketing background and is the first outsider to come in to run the firm. That is important. In recent years the Tesco leadership has stuck it’s head in the sand and hoped the problems would go away. In contrast, Dave Lewis knows radical change is required.

More than anything else, he needs to make consumers love his brand again and that doesn’t just mean cutting prices.

After hounding lots of small retailers out of business, Tesco needs to show it has a heart. So the initiative this month to support food banks was a good start, as was the news that Tesco’s huge bank of undeveloped land is to be used to create much needed housing.

In store they need to stop selling contact lenses and pet insurance and instead concentrate on getting back the grocery share they have lost to the discounters.

They also need to show responsible leadership to escape the shadow of Horsegate. That could mean committing to giving 25 per cent of all space in every store to fruit and vegetables to help tackle bad diet or perhaps banning confectionary from the tills or giving extra reward points to those making healthy purchases.

Whatever the solution, it needs to be radical or the new Tesco chief executive will need to have that headhunter telephone number handy.

 

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