Lewis shops for suggestions as Tesco’s list of problems lengthens
Retailer’s new chief executive has battle ahead to get business ready for Christmas
Tesco chief executive Dave Lewis: “The bit that is interesting is that that I have never run a shop in my life.” Photograph: EPA
The new boss of Tesco won’t have much time to talk to journalists over the next few months as he battles to get the supermarket group into some sort of shape ahead of the Christmas onslaught.
That’s probably just as well given the results of Dave Lewis’s first newspaper interview, published in the London Evening Standard, as he took up his new post on Monday.
Not surprisingly, given that he has been parachuted into the toughest turnaround job in retail a month ahead of schedule, the 49-year-old former Unilever executive gave little away about his future strategy at Britain’s biggest supermarkets chain.
But he did provide some interesting insights into his approach to the job; insights that were not altogether reassuring.
Here’s a flavour: “I am wonderfully naive about some of the stuff that is going to come but that is fine, it has served me well up to now,” he told the Standard.
Reminding anyone who might not already know that he has zero experience in retailing, Lewis remarked: “The bit that is interesting is that I have never run a shop in my life.”
Finally, asked why he wanted the Tesco job in the first place, the new boss of the world’s second largest retailer said: “I needed to find out for myself whether I can lead a whole business…I don’t think you know whether you can truly lead a business until you sit in that seat.”
That’s either disarmingly frank or a sign that Lewis, who spent 27 years working within the Unilever empire, has no idea what’s about to hit him.
The dire profits warning last Friday, the slashing of the dividend and subsequent plunge in the shares,will have underlined the scale of the task ahead of him.
Bad newsAnd the bad news kept coming – as Lewis settled into Tesco’s Hertfordshire headquarters on Monday, the share price slid a further 2 per cent as it emerged that one of the group’s key investors is bailing out.
Chicago-based Harris Associates has cut its Tesco stake from 3 per cent to 1 per cent, saying the risks of the investment are too high to justify such a large holding.
“We need to hear a plan that makes sense,” said Harris’s David Herro.
Piling on the pressure, other City investors have been selling down their holdings, offloading several hundred million pounds of stock in the two months ahead of the latest profit warning.
Lewis is certainly not short of advice on what he should do to restore growth at Tesco. One retail analyst published a long and detailed note on the group in the form of an open letter to Lewis.
“Dear Dave,” wrote Bruno Monteyne of Bernstein Research, “Your new job ought to be the envy of your peers. It probably isn’t.”
Among the moves advocated by Monteyne, who was formerly an executive at Tesco, are ditching national pricing policies in favour of local pricing and immediate closure for any business unit that can’t break even within 12 months.
The analyst urged Lewis not to close too many stores, as some other industry experts have suggested, but to convert space in the under-performing out-of-town outlets to other uses, such as mini “dark stores” to fulfil online orders or leasing out to other retailers.
And Lewis, who accepts that urgent action is needed but has stressed that he will not be rushed into any hasty decisions, is seeking advice from Tesco employees. In a companywide communication on his first day, the new boss asked his 500,000-strong staff to come up with suggestions.
In person“I want to hear what you think we could do differently or better,” he said in an internal email. He added: “Hopefully we will get a chance to do this in person, but for the sake of immediacy please send any comments or ideas to me by email.”
The idea of asking half a million employees to have their say smacks of the naivety that Lewis himself has highlighted; it’s unimaginable that past chief executives such as Sir Terry Leahy or Lord MacLaurin would ever have sought the views of their shop workers.
But perhaps that’s just what Tesco needs – a break from the arrogance of the past, an arrogance that has led the group to its current predicament. Maybe naivety will enable Lewis to take the tough decisions and see them through.
He’s only been in the hot-seat for 48 hours but let’s hope, for the sake of those 500,000 employees, Lewis finds out soon that he does, indeed, have what it takes to truly lead a business. Fiona Walsh is business editor of theguardian.com