Advice to the incoming CEO of Tesco

Advice to the CEO of Tesco

Well I can tell you one person who’s celebrating the appointment of Dave Lewis as CEO of Tesco – me. Come on, be honest. If you share a FMCG marketing background it is deeply satisfying to see one of our lads take the top retail job. Listening to the commentary in the media everyone seems to agree on two things.

Firstly our Dave will sort the brand out. Opinions vary from thinking Tesco doesn’t stand for anything these days to Tesco having become the epitome of nasty big business. Either way, 'Every little helps', the creation of another former FMCG lad, Tim Mason, does not come across as the big brand idea that will fight back the discounters in post-austerity Britain. Sadly there is a second point, a concern, one that is also widely commented on. Dave is not a retailer and might struggle to get to grips with the reality that ‘retail is detail’.

We all want to see him succeed (well I do anyway), so I thought I might add my voice to the cacophony of advice he is doubtless getting right now. So here goes:

  1. It was not little helpful things that built Tesco, it was big things. Green shield stamps, then getting out of Green Shield Stamps, pile it high/sell it cheap, initiating one or two major price wars, offering a genuinely better store with wider isles and checkouts and bigger car parks, an aggressive store expansion policy that nailed the best sites, a fresh food and own label offer that eclipsed Sainsbury’s, a more organised approach to non-food, the most aggressive approach to suppliers etc. Tesco became the biggest retailer because they were the best retailer and the toughest retailer. Retail is detail but the first key question is what do you keep, what do you change and what do you stop in order to re-establish Tesco as the best and most progressive? The Holy Trinity of retail is Price/Convenience/Range – but what does each mean in 2014 and beyond?
     
  2. Convenience these days includes e-commerce and how e-commerce integrates with the bricks and mortar. This is the number one battleground Tesco must win and I would put my best team on it. In a few short years a third or more of everything Tesco sell will be through e-commerce and even more will be a combination of technology enabled purchases e.g. Click and collect. Done well this can a) make a unique competitive advantage out of Tesco’s scale and b) bring them closer to their customers and their communities.
     
  3. Accept the world has changed. The job is not to rebuild the old Tesco, the existence of Aldi etc has changed the tectonic plates. There are two responses to this reality. Firstly, Tesco need to get as close as they can to Aldi prices without being Aldi. They will never build a perception that 'Tesco is just as cheap as Aldi' but they need to get to 'Tesco is about the same but better in many other ways'. Secondly, the new market structure will probably not support the size of the retail estate they have now. This was true for M&S but they were too slow to react. Roses grow well if you prune them.
     
  4. Our Dave will indeed sort out the brand and he will do so by sorting out the values of Tesco. He will decide what Tesco needs to stand for in peoples’ minds and needs no advice from me or anyone else on how to go about this. However, Dave, do yourself a favour – hire your own loyal COO who has incredible operational skills gained probably, but not necessarily, in retail (you also find these skills in Mars or the big brewing businesses like ABI and SABMiller). Because values mean nothing if they are just asserted. They have to be evidenced and that means translating them into 'every little thing that helps'. Make sure you give yourself a big enough internal marketing budget to do this.
     
  5. Calibrate expectations – this is a 5 year job. However, the reality of publicly quoted businesses – especially one as big as Tesco – is that you need to build confidence among the shareholders. So you will need 'islands of success', the leading indicators that show the ship is turning and that you will win. I refer you back to my second point – make that e-commerce. In addition focus on brand momentum and differentiation. The two image statements that I would track like a hawk and make the number one KPI for my marketing team are a) 'I believe Tesco is different' and b) 'I believe Tesco is becoming more popular'. When they move positive the revenues and profit will follow.

My final point is this – from among the cacophony of advice take the time now to speak to a small group of people you trust for advice from both within and without the business. That is what I did. I wrote this based on a discussion with just a couple of really smart people. If you are interested Dave I’ll tell you who they were, but my point is there are lots of smart people who want to help you succeed. They won’t all agree but they will help you formulate your plan – and every little helps.


Read more from Mark in our Clubhouse.

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