Mark Ritson: Is Dave Lewis really the right choice for Tesco?
There were no raised eyebrows this week at the announcement that Philip Clarke will depart his role as Tesco CEO. Profit warnings, share declines and a growing sense that Clarke was unable to reverse the increasingly negative momentum of Tesco’s brand equity meant he had to go.
More surprising was the announcement of Clarke’s imminent replacement. On paper, at least, Dave Lewis looks exactly the kind of leader Tesco needs for the difficult challenges ahead. He comes from Unilever which, along with Procter & Gamble, has long been seen as one of the two traditional homes of marketing leadership. He has a very strong track record at Unilever where he was responsible for the launch of Dove into the UK in 1992 and went on to hold senior positions including running its UK and then US businesses. He is also young enough at 49 to be able to see the retailer through what will inarguably be the hardest and potentially longest transformation in its history.
But there are two things Lewis does not have in his favour that suggest his recruitment is a huge gamble.
First, he is not a Tesco man. It may sound odd to those of you who work at an agency or for a manufacturer but retail is more often than not a job for life. The traditional path to running a retail business is to start fresh from university, or more likely school, and work your way up from shelf stacker to store manager to divisional head to functional head to CEO.
In direct contrast with other sectors the leadership teams of most of the big retail brands around the world are made up of committed employees who have spent their whole adult life at the same company. Mark Price, the CEO of Waitrose, joined the brand’s owner John Lewis Partnership straight from university. Asda’s Andy Clarke started out as a store manager in 1992 at the supermarket. Both of Tesco’s previous CEO’s started out as shelf stackers in their teenage years. Retail leaders are usually bred not acquired.
It’s more than a symbolic advantage. If Dave Lewis is to be successful he will have to take the organisation through potentially its biggest ever transformation and it could be a decade before the brand successfully emerges. An outsider like Lewis, the first to ever take the helm at Tesco, will have to work very hard to make sure he has the hearts and minds of his employees as he embarks on his grand transformation. One or two initial false steps and the grumbles and accusations that the new leader “does not get” the Tesco way will begin to echo around Cheshunt. It was always going to be hard but as an outsider that challenge is going to be even more difficult.
The other big factor against Lewis is his lack of retail experience. As a marketer from Unilever clearly Lewis is no stranger to working with mass retail channels. But that does not make you an expert on retailing. I’ve successfully driven my car to work every morning for two decades, but have not the faintest clue how the engine works. Asking a man with no direct retail experience to run the world’s second biggest retailer is a huge gamble. Once upon a time, back in the 80s and 90s, it was clear that a job in marketing at a major manufacturer like Heinz or Nike was the ultimate role to aim for and retailers were a lower calibre of manager.
But that was a long time ago. These days, retailers run the world. Their business models are superior and they own and operate the biggest and most successful brands in every developed country. So, the people these retailers have recruited and trained have become the apple of most recruiters’ eyes. A senior manager from a retail background is head and shoulders above his peers who work for the major FMCG groups or consulting firms. They understand customers first hand. They have seen directly how different competitors operate in the market. They obviously understand retail and all the challenges associated with it. Best of all they just work harder and move faster than their more pampered peers further up the supply chain.
It’s intriguing that a brand famed for promoting from within, in an industry notorious for insider experience should head hunt their new leader from so far afield.