Analysts applaud Tesco for succession management

Marketing industry experts are “surprised” by the news that Sir Terry Leahy will stand down as Tesco CEO next year, but do not expect it to damage the brand or its position as market leader.

Leahy’s main goal from the start was to make Tesco number one in the UK. When he took over, its market share stood at 20%, just above Sainsbury’s.

In the latest available data from Kantar Worldpanel (to May 2010) its market share is 30.6%. Leahy says his plan is “almost complete” given that he has also overseen expansion of the supermarket into foreign markets.

Although Leahy’s loss has been felt in the financial markets with a slight dip in share price on the back of the announcement, experts say there is unlikely to be any lasting damage to sales or the brand.

Head of international Philip Clarke takes Leahy’s place. But the challenge for the new board does not only include replacing Leahy. Some suggest the brand has lacked emotional warmth of late and the arrival of Clarke provides an opportunity to look at this issue of image. The company’s main advertising agency is The Red Brick Road.

Verdict senior retail analyst Matt Piner says the “seamless” change in management succession at Tesco stands in marked contrast to that at Marks & Spencer, which was “lengthy and complicated”.

He adds: “Managing Terry Leahy’s departure in this fashion ensures that Tesco maintains its impressive momentum.”

The Marketing Store European managing director Simon Marshall says: “Tesco has shown again the value it places on the contribution to be made from insiders with a long history and commitment to the brand.”

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Research Methodology: To examine the views of children aged six to 11 years old, Marketing Week commissioned Fly Research to undertake a quantitative study with 377 children of this age in April 2010. Discovery Research then conducted detailed focus groups with 27 children in May 2010 to provide qualitative results.

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