Tesco boss is keeping to the belief that ?retail is detail? to revive the world No. 3 grocer?s performance, but while his strategy was well received, the former shelf-stacker has less than two years to prove he is right.
Chief executive Phil Clarke unveiled a 1 billion pound ($1.6 billion) plan last week to improve the look and feel of Tesco stores, offer better quality and more products, hire extra staff and train them to be more friendly in order to stop market share being eaten away by fiercely competitive rivals in Britain.
?Execution is key. Turning the UK around is all about doing 1,000 things 1 percent better, the devil being in the detail,? said Philip Dorgan, retail analyst at Panmure Gordon.
Last month, Clarke jettisoned the head of the UK operation, assumed his duties and is now directly in the firing line if his plans fail to halt a slide in sales.
If anyone should be able to pull off a strategy based on the nitty gritty of shops and shelves it should be Clarke, a retailer for life who was born into the Tesco business.
The son of a Tesco store manager, Clarke?s first job, aged 14, was stacking shelves at a local Tesco store on Saturdays. Rejoining the firm as a graduate trainee in 1981, he worked his way up through the ranks, succeeding longstanding CEO Terry Leahy in March 2011.
In his 14 years at the helm, Leahy transformed Tesco from a British also-ran into a seemingly unstoppable international juggernaut which now has 5,300 stores across 14 countries. But UK sales were already faltering and 10 months after Leahy?s departure, Clarke had to issue Tesco?s first profit warning in 20 years.
A top 20 Tesco shareholder said investors will need to give Clarke time to restore the magic to the UK where it is still the dominant player with 30 percent of the grocery market.
Ratings agency Moody?s took a different view and downgraded Tesco?s long-term senior unsecured rating by one notch to Baa1 from A3, saying it would take time for Tesco to return to its previous levels of profit growth.