Retail guru Leahy buys into optimism on economy
Former Tesco chief says functioning economy is key to retail industry success
“We need the Government to give us the leadership,” said Terry Leahy, former Tesco chief executive, speaking at a forum entitled Revitalising Ireland Through Retail at Dundrum Town Centre, Dublin. Photograph: Frank Miller
lllA minute’s silence wouldn’t go amiss when Sir Terry Leahy tells a roomful of retailers in Dublin that he remembers “the boom”. They have come today to learn from the master about how they might be able to bring it back, even on a tiny scale.
The former Tesco chief executive and all-round retail guru is in Ireland at the request of Sen Mary White, who has organised a retail forum in Dublin’s Dundrum Town Centre and lured Leahy, a Liverpudlian of Irish parents, as her star draw. He doesn’t disappoint the rapt group, delivering a series of practical messages on how retailers can start, grow and maintain businesses.
First, though, he assures them he is “optimistic” for the industry as a whole, provided the economy turns the corner it appears to be rounding.
“As I see it, Ireland is recovering,” he says, emphasising that the key to a successful retail industry is a functioning economic backdrop. With that out of the way, he reckons the Government has a role to play alongside the retail sector itself.
“We need the Government to give us the leadership,” Leahy tells the group, adding that “too much regulation of products and markets is a dead weight on economic growth and development”.
Instead, he suggests politicians should “just trust us a bit more”, perhaps leading a “celebration” of entrepreneurs. Leahy, a career Tesco man, says governments need to encourage the idea that owning a business is a “noble pursuit” in that it helps society meet broader social aspirations.
He says now is a great time to start a business because barriers to entry are lower than in the past and the internet makes opportunities much broader. On the negative side, however, he says costs are too high, particularly in relation to business rates and energy.
Leahy also acknowledges the “length and depth” of the recession, which has seen some consumers cut spending by up to 20 per cent.
In this context, he believes retailers must change their mindset from the idea that they have “a shop” and instead think about how they can “serve” customers, whether online or in a physical outlet.
“You’ll still have a business if you really serve customers and satisfy the needs they have in their lives,” he says.
The danger for established businesses, in his eyes, is to do “the same thing over and over again”. He advises such retailers to “make a truthful acknowledgement” of where their business is today, rather than referring back to trade in better times. Any loss of direction can be temporary, with declines not irreversible as long as the business owner is prepared to make “fundamental changes”.
At its base, he believes the retail industry is “remarkably resilient”, and he should know, having led Tesco for 14 years and presided over vast growth at the supermarket chain. He departed Tesco in 2011 but the retailer has proven hard to leave behind, with some blaming its recent slump on Leahy’s expansion strategy.
Leahy says he has turned his attention to private equity, with a particular interest in e-commerce. His investments include B&M, a British-based discount general retail chain that has made it to Northern Ireland but has not yet crossed into the Republic, where the discount market is already crowded.
Speaking after the event, he declined to discuss Tesco’s recently-poor Irish performance – much of it due to Aldi and Lidl – but said that in general “you can have a very good business if the world around you changes, then you have to change with it”.
He said economic recovery should ensure existing Irish supermarket players survive, but noted that “who gains share and who loses share is down to the managers” as well as “how the customer feels as they come out of recession”.