Tesco faces repositioning post crisis

By David Benady

Dave Lewis has got the mother of all relaunches on his hands. The new chief executive of Tesco is tasked with turning around poor performance at the supermarket giant but first has to put out fires on many fronts. The former Unilever personal care chief was brought in to rebuild sales, boost the flagging market share of the UK’s biggest retailer and re-energise its battered brand. But since taking up the role in August, things have gone from bad to worse.

Little did he know that he would also be sitting on a massive corporate accounting shambles triggered when a whistleblower revealed that Tesco’s finance department had overstated this year’s first half profits by £250m. Lewis has vowed to get to the bottom of the problem, he suspended four senior executives and asked in-coming finance director Alan Stewart from Marks & Spencer to join early to try and sort out the mess.

Then came the news that Lewis’ predecessor Philip Clarke had splashed out £30m on a Gulfstream corporate jet last year just after announcing the chain’s first profit warning in 20 years. Meanwhile, Warren Buffett, considered the world’s cleverest investor, said last week that he regretted investing in Tesco..

This flood of bad news is good news for Lewis, as it provides him with just the cover he needs to discredit the old regime and introduce a new set of strategies.

After spending 27 years at Unilever, Lewis is now joining one of that company’s biggest customers. He was instrumental in transforming Unilever, smashing together three separate divisions into one and leading it back to growth after a decade of under-performance. The deep cuts he made there – including 300 redundancies – earned him the moniker “Drastic Dave.” Looking at the task which confronts him at Tesco, his strategies will need to be equally drastic. But it is not just cut-backs that are needed at the chain so much as finding a way to re-enthuse staff and relaunch the Tesco brand.

As he said in an interview for the Tesco website, “All of the answers are already here, there is enough expertise in our business to know there are things we could do better.” He said he had found a genuine desire among staff to put the customer first. “We are at our best when we are champion for our customer”. This drive to motivate staff will not come through internal communications, though, but will be driven by leadership. “Action changes morale much more than speeches or – dare I say it? – internal communication.”

Lewis has to relaunch Tesco on every front. First and foremost he must clean up the finance department and restore the trust of investors, regulators and investigators. He must motivate the chain’s staff. And then comes the biggest job of all – luring shoppers back to Tesco.