Monday, February 28, 2011

Changing of the Guard: Clarke Takes Over the Reins as Tesco CEO Wednesday


The Changing of the Guard at Tesco

A source at Tesco headquarters in Cheshunt, United Kingdom tells Fresh & Easy Buzz that incoming CEO Philip Clarke joined others today in wishing happy birthday to retiring CEO Terry Leahy, who celebrated his 55th birthday today, his last official day in the office as the leader of the world's third-largest food and grocery retailing chain and undisputed retail market leader in the UK, with nearly as much market share (about 31%) as its two leading rivals, Walmart-owned ASDA and Sainsbury's have combined.

Clarke, who's been Tesco's director of European and Asian retail operations as well as its director of information technology for a number of years, officially becomes CEO on Wednesday, March 2, which just happens to be the day Tesco's Fresh & Easy Neighborhood Market USA launches into Northern California, opening its first two stores, in San Jose and Danville. [See - February 14, 2011: First Look: Fresh & Easy Neighborhood Market Store in Northern California's Danville Set to Open on March 2; and January 17, 2011: First Look at the Willow Glen-San Jose Fresh & Easy Neighborhood Market Store Set to Open March 2, 2011.]

Sir Terry will be in the office tomorrow, we're told. But the day will mostly be ceremonial for the three-decade-plus Tesco veteran, who started as a stock clerk in a Tesco store while still in high school and has been CEO for the last 14-years.

Leahy might even leave the office a bit early tomorrow, as he prepares for what will be an active retirement as a private investor, part-time consultant to British Prime Minister David Cameron and head of an economic revitalization organization in the community where he lives. We suspect other ventures are in the works for the retiring CEO as well. After all, last week he trousered around $8 million by cashing in a couple million stock options. [See - February 28, 2011: Big Day For Tesco CEO Terry Leahy: Retirement and A Birthday But No Break-Even For Fresh & Easy USA On His Watch.]

Tesco and Leahy announced his retirement and Clarke's being named CEO on June 8 2010. And as part of the company's well-oiled succession process, Clarke has been working hand-in-glove with Sir Terry since then, trying on the CEO-shoes in order to get the best fit possible when he assumes the corner office at corporate headquarters on Wednesday. [See - June 8, 2010: Tesco CEO Terry Leahy Retiring; Philip Clarke New CEO; Tim Mason Named Deputy CEO But Will Remain Fresh & Easy Neighborhood Market Chief in U.S.

Among Clarke's metaphorical shoe-fittings was a recent trip to the U.S., which included nearly a week's worth of meetings and face-time with CEO Tim Mason at Tesco's Fresh & Easy Neighborhood Market headquarters in El Segundo, California, along with visits to Fresh & Easy stores in California, Nevada and Arizona. [See - February 23, 2011: Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market.]

A little bird told us one of the brief face-time activities Clarke had while visiting with Mason in February, who on March 2 also gets a new title - Tesco deputy CEO will be added to his current Fresh & Easy Neighborhood Market CEO title - along with a couple new corporate duties - overall responsibility for the company's branding and climate change initiatives - was some discussion about starting to use the Fresh & Easy chief's Twitter feed, which until recently was unused since being set up in 2009. [See - February 24, 2011: Dormant No More: Fresh & Easy Neighborhood Market CEO Tim Mason is Now Tweeting on Twitter.]

Mason, who will remain in Southern California and continue to spend the bulk of his time running Fresh & Easy, started tweeting on February 20, about five days after Clarke's departure, and has been posting those brief messages on his feed ever sense. (Since we published the piece linked above four days ago, the number of followers the CEO of Fresh & Easy has on his Twitter feed has more than doubled. Of course, correlation doesn't equal causality.)

Philp Clarke has no time to waste though. He must hit the ground running as Tesco's CEO on Wednesday, as he has many challenges facing him and very little CEO learning curve time available to him.

Among those challenges are: the struggling Fresh & Easy chain in the U.S. and Tesco's struggling operations in Japan, both which are losing money; maintaining the retailer's dominance in the UK amid stiff competition; and growing and improving the performance of Tesco's other global retail operations, particularly in China (but also elsewhere in Asia and in Europe), where as the head of Europe and Asia Clarke has put into place major growth plans. [See - October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market.]

Regarding China, Tesco today announced some new growth plans in the nation with the fastest-growing economy in the world.

The UK-based retailer says it's signed an agreement to set up a joint-venture to develop shopping malls in the world's most populated nation, which is a follow-on to a strategy its been doing for some time now with its Lifespace Malls project.

According to Tesco corporate spokesperson Greg Sage, 50% of the joint-venture will be owned by a consortium of leading Asian investors including Singapore's Metro Holdings.

The total value of the project is in the region of £170m ($276.5220) with Tesco and the joint venture consortium each investing approximately £30m ($48.7980) of equity. Debt will be provided by banks including the Industrial and Commercial Bank of China and Standard Chartered Bank, Sage said today.

This joint venture will comprise three shopping malls in Shenyang, Xiamen and Fuzhou, each of which includes a Tesco hypermarket as an anchor tenant. The Lifespace shopping malls are part of Tesco's long term strategy to invest in building a substantial business in China, Sage said. Tesco currently operates four Lifespace malls and 93 Tesco hypermarkets in China.

At home in the UK, Tesco on Sunday (February 27) launched a counter-attack directed primarily at but far from exclusively on Walmart-owned ASDA, which along with Sainsbury's are its two main competitors.

A couple months ago ASDA started a program in which it says it will match the retail prices of all its competitors in the UK, including Tesco. Along with the price program's launch, ASDA lowered the everyday prices on numerous everyday items in its stores. The program has generated much attention and irritated outgoing CEO Leahy, who's said that despite the ASDA price promise Tesco still has better overall everyday prices than the Walmart-owned competitor does.

But actions speak louder than words, and yesterday, just two days before Sir Terry departs, Tesco launched what it's calling its "Price Check" program, which includes lowering the everyday price on over 1,000 items. Like ASDA's price check program, Tesco's features a website (here) where shoppers can compare prices from various retailers.

Meanwhile, on Wednesday, when the official CEO changing of the guard takes place at Tesco's UK headquarters, its Fresh & Easy Neighborhood Market USA chain will open the first two of what are its first batch of 11 stores in Northern California set to open in March and April.

You can bet even though Wednesday, March 2 will be his first official day as Tesco's CEO, and it will be a very busy first day at that, Philip Clarke will be taking a bit of time out of that very busy first day as CEO to check in on the two stores opening across the pond in the San Francisco Bay Area, which along with the rest of California is where Tesco is focusing nearly all of its new store growth this year.

It's also not lost on Clarke, or on observers like Fresh & Easy Buzz, that the first stores in Fresh & Easy Neighborhood Market's Northern California launch, which originally was planned to happen in early 2009 but was postponed because of what Tesco said was the bad economy but was equally due to Fresh & Easy's poor performance and bleeding of cash, are opening on March 2, the same day Clarke officially becomes CEO.

A fresh start for Tesco. A fresh start for Fresh & Easy. Perhaps that's what the symbolism of the March 2 timing could (or should) be viewed as?

Follow the Changing of the Guard at Tesco on Fresh & Easy Buzz

February 28, 2011: Big Day For Tesco CEO Terry Leahy: Retirement and A Birthday But No Break-Even For Fresh & Easy USA On His Watch

February 25, 2011: A Parting Gift: Retiring Tesco CEO Terry Leahy Exercises Options and Sells Nearly Three Million Shares of Company Stock

February 24, 2011: Dormant No More: Fresh & Easy Neighborhood Market CEO Tim Mason is Now Tweeting on Twitter

February 23, 2011: 'The Insider' - Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market

January 27, 2011: Incoming Tesco CEO Philip Clarke Names Expanded Corporate Executive Committee

October 8, 2010: 'The Insider' - Incoming Tesco CEO Philip Clarke Needs to 'Imagine' When it Comes to Fresh & Easy Neighborhood Market USA

October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market

October 4, 2010: Tuesday's Tesco Interim Report Offers A Road Map of Sorts For the Future of Fresh & Easy Neighborhood Market

September 13, 2010: 'The Insider' - Reading Philip Clarke's Tea Leaves: Might A Mixed Corporate/Franchise Model Be in Fresh & Easy Neighborhood Market's Future?

June 12, 2010: 'The Insider' - Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

June 8, 2010: Tesco CEO Terry Leahy Retiring; Philip Clarke New CEO; Tim Mason Named Deputy CEO But Will Remain Fresh & Easy Neighborhood Market Chief in U.S.

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