Tesco: new CEO Dave Lewis must return the brand to its 'helpful' best
Tesco: new CEO Dave Lewis must return the brand to its 'helpful' best
A view from Tracey Follows

Why Tesco's incoming CEO Dave Lewis must return the brand to its 'helpful' best

Over seven years of recession and austerity, Tesco has squandered its hard-earned crown as Britain's 'helpful' retailer. CEO Philip Clarke is now paying the price, writes Tracey Follows, a former retail marketer and out-going chief strategy officer of JWT London.

Only last week I was talking to a city retail analyst about the "Tesco situation". We were discussing what Tesco should do next in the face of the discounters’ continued invasion of the UK grocery market. Was it unstoppable? And was Philip Clarke the man to stop it?

We decided that Tesco would have to do something radical in order to do so, which would go well beyond brand communications or superficial marketing spin. And it looks like Tesco has done just that by replacing Clarke, announcing today that the 40-year Tesco veteran will step down in October.

The word on the street was that Clarke was an operations guy, at a time when what the company needed was a marketing guy; Tesco, people were saying, was in need of someone who could help re-connect with customers and re-establish the brand. This suggests someone with a background not as a store manager, but rather as a brand manager.

And that's the type of person who has been chosen. Dave Lewis is a hugely successful marketer at Unilever with an FMCG brand background. He presides over some of the most well-known and, in some cases, well-loved, household brands.

If he arrives in October, that will be just as the grocers embark on their Christmas trading period (#awkward). But what will he find when he does finally arrive at Tesco?

Marketing expertise

My sources had been saying for some time that there was a lack of marketing expertise on the current board, and that those who had not seen eye-to-eye with Clarke over marketing issues had one by one disappeared.

It’s quite trendy to hire for big retail jobs from FMCG these days, especially as shopper marketing increases in importance and complexity - but the examples so far have had mixed results. Marc Bolland, the CEO at Marks & Spencer, who has just lost his CFO in a career make-or-break move to Tesco, arrived from FMCG. The real issue is that the nature of food retailing, as a business, is undergoing structural change.

Tesco as a brand is at its best when it is in the service of consumers – helping consumers by offering them the best solutions to the most relevant problems they face every day.

The entry of Aldi and Lidl brought new competitors with new business models into the market. In the retail category, large superstores have a high operational gearing. So, when a discounter has an impact on Tesco or Sainsbury’s sales, it hits those businesses’ profits very hard. Conversely, Aldi and Lidl’s smaller and fewer stores only need a small increase in sales for it to show up as a significant rise in profits overall.

Consumers have fundamentally changed, too. They are trading down by format and reducing total expenditure on food, but will pay a price premium for convenience. They are taking up internet shopping, and click and collect services, and while internet food shopping is small at about 1% market share, it is less profitable for the retailers. Long-term, the more that people shop over the internet, the more convenient it is for shoppers, but the more the dangerous it is to the retailers, potentially destroying millions of industry profit.

All this adds up to a picture where there is no volume growth, no soft underbelly. Just making your existing shopping space more efficient, rather than adding capacity, is the name of the game.

Tesco as a brand is at its best when it is in the service of consumers – helping consumers by offering them the best solutions to the most relevant problems they face every day.

"Every Little Helps" is not just an advertising endline, it is a company ethos (or should be) and the way back to success for Tesco, is to proof-point that ethos every day through the adoption of initiatives that help shoppers shop more efficiently, more conveniently, more economically, more happily.

Shopping experience

We have seen little evidence of Tesco wanting to embark on such initiatives of late. Instead, the line has been slapped on the end of 20-second TV ads almost as an afterthought, with little going on in store or in other areas of the actual shopping experience. But embark on these "helpful initiatives" – alongside price initiatives - it must, and it must do so now.

In the last seven years of recession and austerity, Tesco should have claimed its "helpfulness" crown, working hard on behalf of its customers to provide solutions to the hardships that its shoppers faced, and doing so in a uniquely Tesco way.

Instead it allowed Aldi to step into the breach. Just last week, Aldi was rated the UK’s top brand for the first time in the 2014 YouGov BrandIndex mid-year Buzz ratings. For a small player, it is very salient.

So one is left with the feeling that Philip Clarke, much like Philip Hammond, was the unfortunate person who was put in charge just at the time when the whole environment suddenly changed and became much more tricky than it had been in the old world order.

One thing’s for sure: in a time of structural change, it’s not a question of new personnel as much as it is a question of new strategy. What will that strategy be? Only Dave Lewis knows the answer to that.