Tesco CEO Philip Clarke Says His Personal Breakthrough at Tesco Was as its Sausage Buyer Nearly Two Decades Ago

Fresh & Easy Buzz Editor's Note: Tesco group CEO Philip Clarke (pictured above), who was named to the top spot at the United Kingdom-based global food, grocery and general merchadise retailer in March of this year, spoke at the annual IDG Convention held today in London. 

Prior to taking over as CEO from Terry Leahy, who retired in March after leading Tesco plc for 14 years, Clarke, 50, who joined the company over three decades ago as a part time stock clerk while still in high school, was in charge of the retailer's European and Asian retail operations, as well as its corporate information technology function.

Tesco, which is the third-largest retailer in the world after number one Walmart Stores, Inc. and number two Carrefour of France, currently operates 5,380 stores in 14 countries, including 182-store Fresh & Easy Neighborhood Market, which is based in El Segundo, California. The United Kingdom-based retailer has nearly 500,000 employees worldwide.

The topic of Clarke's speech today was: 'Breakthroughs' - describing how the three t's - Technology, Team, Talent - drive change.

Below is what Tesco CEO Philip Clarke had to say today, in his own words:

“Breakthrough” is a word that most people usually associate with science or medicine. A new cure, a new technology that will transform our lives. Retailing, shopkeepers – what breakthroughs have they ever achieved?

Well just think about that for a moment. Refrigeration, the bar code, the milk carton, the supermarket itself: retailers and suppliers have taken new technology – or developed our own –and transformed not just our industry, but our customers’ lives.

Many of you here today – including the IGD itself – have played a major role in this. And I’d like to think that Tesco has done its bit.

Clubcard, our focus on the customer, new formats, new ranges and services – over the years we too have helped shaped the landscape of retailing by breaking through into what were “no go zones” for supermarkets.  

All these breakthroughs, whether at Tesco or elsewhere, are often sparked by a new piece of technology. But I want to argue today that breakthroughs depend on more than just technology. They rely on two more t's:  on teams and talent.

These three Ts – Technology, Team, Talent – drive change. Take one away, and you are unlikely to achieve real, lasting breakthroughs. Create new technology, uncork talent, mix in a strong team, and you have a powerful recipe for change.

Tesco’s strategy today: the challenge of new retailing

During my time at Tesco I have seen the full impact that breakthroughs – some our own, others not – have had on our company. Today we are international, multi-format, multi-channel, a retailer of services, not just food or non-food: Tesco has changed dramatically. And that is largely because we have been strong in terms of technology, team and talent.

To reflect just how much Tesco has changed, I announced earlier in the year that we were going to refresh our strategy. The change is not dramatic, not lurching from one plan to another: it is sensible, careful and thought through.

There is, of course, one thing that will never change. Our world will always revolve around the customer – the customer’s wish for value, range, service, quality. These remain fixed points in our world. All of us here today know that we must deliver on these things or our businesses will fail. So Tesco’s core purpose, to create value for customers to earn their lifetime loyalty – that does not change.  

But we need to respond to the challenge of what I call “new retailing” – the new challenges created by globalisation and the digital revolution, twin forces that accelerate change, increase competition and raise still further the importance of brands. We must show that we are on customers’ side, that we are here to make their lives that bit easier, that bit better.

Embracing new technology

This means embracing new technology. Most of our customers now make little distinction between shopping online and shopping in store. The same must apply to a new retailer. Tesco was the first large retailer to enter the world of the internet. That required a monumental effort in terms of creating new processes, sometimes entirely from scratch, to get customers’ orders to their doors on time. We’ve gone one stage further, and begun click and collect services – so people can order online and then pick up in store.

Now we are going one stage further still. Tesco Homeplus in South Korea has created the world’s first virtual store in the Seoul subway to help time-pressed commuters shop on the go using their smartphones. The walls of the subway station in downtown Seoul are covered with virtual displays of over 500 of the most popular products with barcodes, which customers can scan using the Homeplus app on their smartphones and get delivered right to their doorstep. 

Busy commuters can scan their groceries on their way to work in the morning and, as long as their order is placed before 1pm, their shopping will be delivered home that same evening, creating even greater speed and convenience in the whole shopping experience.

That’s the kind of breakthrough that really transforms people’s lives – and quite possibly our industry.  It relies on state of the art technology – and carefully thought through systems, in which every process is thought through, every person knows exactly what he or she is meant to do. Which brings me to the other two Ts – team and talent.

Team and Talent

As a business that employs almost half a million people, obviously team and talent are critical to Tesco.  They’re so important that I have added to our strategy a clear goal: to build our team so that we create more value than any other. As our business continues to grow and diversify, we need more leaders to run the many, substantial business and support functions within the Group. Our leaders not only have an important role today, but also have a responsibility to help build a bigger and better team for the future.

I know what you may be thinking: we are facing one of the toughest trading conditions this country has seen for decades – what relevance has this to the here and now?

The truth is, though, that it is in such turbulent times that your team is tested the most. It’s in a storm, not calm waters, when a crew is really challenged. That’s why our team matters so much today.  Can we change to meet the new conditions? Have we the stomach for the fight in ever tougher markets? Can we continue to innovate, to stay ahead of the pack, helping our customers as they struggle to make ends meet?

The answer is yes. In the last month here at home we have made the biggest change to our pricing and promotions strategy in many years, investing over £500m in reducing more than 3,000 prices, as well as simplifying and deepening our promotional discounts. We’re absolutely committed to doing what we can to help customers by cutting prices on the nation’s shopping list – the things families buy most often and where it will make the most difference.

It has already been a huge team effort – a 14,000 strong Tesco army worked a total of 90,000 hours on the Sunday we launched The Big Price Drop, changing almost 3 million price labels on shelves up and down the country.   It’s a strong team especially when times are tough.

But there is another reason I care so much about building the team and fostering talent – a personal reason.  I owe a lot to Tesco – it’s given me fantastic opportunities in life. My father ran a Tesco store extremely well - but he didn't have the confidence that training brings to do more than that. I’ve been lucky enough to have that training. In my twenties, working at Tesco, a regional director taught me about process and systems.

Then there was the store manager for whom I worked who taught me about leadership; the new store opening director who taught me about multisite management; John Bird, who ran retail in the UK, who taught me about trading and the importance of cherishing the products we sell.

And in my thirties I learnt about buying, marketing and strategy from some of the finest retailers in the world. Indeed - my personal breakthrough point was when I was the sausage buyer. That’s why these two t’s – team and talent –matter so much to me. And why the object I have brought today is the forerunner to Tesco's Finest range - a pack of Tesco Traditional sausage, circa 1991.

Let’s start with the basics. A strong team needs a clear purpose – a purpose that endures, that appeals to the head, not just the heart. If the purpose of a company is just to make something, that won’t endure: that thing will probably soon become old and then redundant – consigning the company to history. A company needs to explain how it will help people over time. As I said earlier, our core purpose, written in 1997, remains untouched.

Alongside that sits clear values. Values guide a business - and everyone in it. How they behave, how they respond to change, how they talk to each other and their customers. They need to test one, to give you something to aspire to – as well as being simple to understand. Our values are “no one tries harder for customers” and “treat people how we like to be treated”.

And the third bedrock of a strong team is a clear strategy, so clear and simple that everyone knows precisely why they are getting up and going to work each day, so they know what is a priority, and so they understand what success is.

These three bricks – purpose, values and strategy – are the foundations of a team. They answer the questions “why are we here?” “how are we meant to behave?” and “what is success?” But that is just the start.

Each person needs to know how they fit in to company – and, crucially, what is expected of them. They need to own a task – that means being given responsibility for a task, and be made accountable for its delivery.

Ownership focuses minds – and gives people a sense of pride and respect.

You need to communicate that role in simple ways. Many of you here will know the Tesco Steering Wheel, which sets out responsibilities for the entire business, each store, each team. It helps us drive change, and ensure that the whole business is moving together.

But you cannot simply send out missives from head office. Which brings me to communication: a head office culture, one where people are given orders from anonymous managers on high – this kills strong teams. You need to be out there, on the shop floor, talking to the teams, explaining what’s happening, and their role.

That attitude reflects something else that Tesco has long held dear: we want our teams to take risks. By trying nothing new you stay as you are. You must innovate. Yes, that means making mistakes – but you learn from your mistakes. So initiative, risk taking, decentralisation, giving each person the encouragement and freedom to innovate and suggest new ideas – these are critical.

New steps we’re taking to foster talent

These basic principles have guided our approach to building strong teams for over a decade. Our new focus on our team, now part of our strategy, will turbo charge our efforts, and help us embrace new technology.

Recognising the simple, obvious fact that we are a people business – run by people, for people – I want everyone to shoulder a responsibility for fostering talent. That means we need to adopt three additional basic principles to team and talent.

First, an end to thinking in silos, to saying that “recruitment, training –that’s not my job”. Talent spotting, performance reviews, career discussions: these will become critical tasks for the entire Tesco team.

Second, if we are to retain talent, we need to reward talent. For Tesco that means competitive pay at all levels, an opportunity to share in our profits through shares in success, and bonuses linked to performance for all senior managers. More importantly, our people are rewarded through opportunity – at any one time 7,000 members of our UK team are on development programmes specifically designed to help them gain the experience and skills they need to move on to the next Tesco challenge. Little wonder that 80% of our management roles are filled internally.

Third, related to that, we want to nurture our talent so that everyone feels that their best days are yet to come. This is a goal shared by the entire Tesco team, including our partners at USDAW, the trade union with whom we have an industry leading relationship. Nurturing talent means career plans, so everyone knows where they are going, and the type of jobs they need to do to gain the experience and skills to get there. And it means succession plans for jobs: we always have 2 successors identified against our top 500 jobs.  

And we’re investing in training. Here in the UK there's a training scheme for every major career stage at Tesco, from core skills training to Apprenticeships and Retail Degrees, which is another of the reasons why around 80% of our management roles are filled by existing team members. This year we’ll also have a record 420 graduates starting our UK graduate programmes. Overseas we’re recruiting around 600 graduate trainees and in Asia, we’ve invested £30m in our newly opened training academy in South Korea where 24,000 people will be trained every year.

Why this matters

Why does this matter so?

We’re now a global business, and we need a world class team if we are to win and to compete. We don’t simply need to attract talent, we need to motivate and retain it. That’s why I spend so much time – I reckon about three quarters of my time – talking to the team, hearing about what they are finding on the shop floor, helping them improve their performance.

Some of you may think “surely this is not a priority now?” Well, let me stress what I said earlier: when tough times hit, it is even more important to be motivating your team, building that team, helping it overcome the hurdles they face. Some of those challenges are practical – others relate to morale: both are important.

And, finally, I care about building our team because of what I said earlier: my own background. Tesco gave me a chance to get up and get on in life. It’s given that chance to many hundreds, if not thousands of people. It is proof that supermarkets are not just an example of business breakthroughs – but social breakthroughs. For our company – like others here today – is an engine of social mobility, helping people realise their ambitions and dreams. And that’s perhaps the best breakthrough anyone can ask for.

Conclusion

So, to conclude where I began, breakthroughs rely on teams, talent and technology. Embrace the technology, build the team, foster talent. Obviously get the processes, the IT, the systems right. But never forget the basics that govern people: a clear purpose, a set of values, a well understood strategy. Never stop talking to people, make them own their responsibilities, and encourage them to take risks. And then make it everyone’s responsibility to nurture talent, to train and to reward teams – so that they always are looking up and moving forwards.

That’s how we have delivered breakthroughs at Tesco –and how I plan to continue to do so in the future.

Thank you for listening.

- Philip Clarke.

Tesco in America: A Few Things Tesco Deputy CEO-Fresh & Easy Neighborhood Market CEO Tim Mason Might (and Probably Should) Say in His Speech at Town Hall Los Angeles Today

Tim Mason (above), the deputy CEO of Tesco plc and CEO of its El Segundo, California-based Fresh & Easy Neighborhood Market fresh food and grocery chain, will take center stage this afternoon in front of the movers and shakers in Southern California's business, government and non-profit worlds when he speaks at a luncheon event at Town Hall Los Angeles, which is one of the premier business and civic leadership forums in the United States.

Tim Mason, who joined United Kingdom-based Tesco in 1982 after working for three years for Walls Meat, a sausage company owned by Unilever, and rose to be become Tesco's head of corporate marketing in 1995 before coming to the U.S. in 2006 to start up Fresh & Easy Neighborhood Market as its first and to date only CEO, added the Tesco deputy CEO title along with that of chief marketing officer to his Fresh & Easy CEO title in March of this year after Tesco CEO Terry Leahy retired and was replaced by former head of European-Asian operations and corporate information technology chief Philip Clarke.

Mason, who remains based in Southern California, was in the running to replace Leahy as CEO of Tesco but instead was given the deputy CEO slot, which is a new position that was essentially created for him when Clarke was named CEO.

His chief marketing officer title is a return of sorts to Mason's pre-Fresh  Easy days, in that it's essentially the same position he held prior to 2006, although it's less hands on due to his responsibility heading up Tesco's Fresh & Easy chain in the states.

Mason's speech at the sold-out Town Hall Los Angeles event this afternoon, which is being held at the Millennium Biltmore Hotel at 506 South Grand Avenue in Los Angeles from 11:30 a.m. to 1: 30 p.m (he speaks from 12: 30-1:30 p.m)  is titled: "A 21rst Century Approach to Food Retailing."

Presumably Mason will point to now nearly four-year-old, 176-store Fresh & Easy Neighborhood Market, which has lost about $900 million since the first stores were opened in November 2007, including about $300 million in its fiscal year ended February 26, 2001, as an example of that topic in his speech this afternoon.

CEO Clarke and Mason say Fresh & Easy will break even by the end of Tesco's 2012/12 fiscal year, which is just 20 months away. The 2012/13 fiscal year ends February 2013.

In addition to his nearly 30-years with Tesco, Mason also has a very personal connection to the company and its history: He's married to the daughter of the famed former Tesco CEO and chairman Baron Ian MacLaurin of Knebworth, who retired from Tesco in 1997 (two years after Mason became its corporate marketing chief) and went on to a distinguished second career as chairman of Vodaphone and as an investor, philanthropist, politician  and all around power broker in UK business and political circles.

MacLaurin, who was born in 1937, was Tesco's very first executive trainee, joining the then minor British retailer in 1959. He rose through the ranks at Tesco, holding a number of senior executive positions before joining the board in 1970 and becoming managing director (CEO) shortly after that. In 1985 he was named chairman of Tesco's board.

When he took over as head of Tesco, Sainsbury's, which is now about tied with Walmart-owned ASDA as the UK's second-leading food and grocery retailer, was far and away Britain's top gun.

But when MacLaurin, who appointed Terry Leahy as CEO before he left, retired in 1997 after 38-years with the company, 27 of those years on the board, Tesco had cleaned Sainsbury's clock and was far and away the top retailer of food and groceries in the UK.

Terry Leahy built on what MacLaurin created at Tesco. Today Tesco, which is the third-largest food and grocery retailer in the world after number one Walmart Stores, Inc. and Carrfour of France, has nearly as much market share in the UK as ASDA and Sainsbury's do combined.

Tesco's share of the UK food and grocery market is about 31%. ASDA and Sainsbury's have an about 35% combined share, followed by Morrisons, which has about 12% of the market.

As you can see by those numbers, the UK's top four chains hold nearly 80% of the nation's food and grocery market share, leaving the country's numerous other chains to fight it out over the remaining 20-plus %. In fact, if you include the cooperative group (about 6% market share), the food and grocery market share held by the UK's "big five" chains jumps to over 80%.

A few things Mason might say this afternoon

We expect Mason's talk this afternoon at Town Hall Los Angeles to largely mirror Fresh & Easy Neighborhood Market's marketing positioning and message, which is that the chain of small-format (about 10,000 square-foot) fresh food and grocery stores is a "food retailer for the 21rst Century," because its focus is on providing "wholesome food at affordable prices" in a fairly no-frills setting, as the retailer says in its positioning statement.

Since Town Hall Los Angeles also has a civic focus in which business leaders often discuss the role of business in society and in the communities their respective company serves, we anticipate Mason will also devote a significant percentage of his less than one hour speech, which includes questions and answers at the end as part of the hour format, to discussing those aspects of Fresh & Easy's operations and how it relates to the community.

Mason will likely touch on the following topics as part of his speech tomorrow:

>Healthy foods offerings, using as example's the fact most of Fresh & Easy's private brand food products are made without the use of preservatives, artificial flavors or coloring;

>Local foods merchandising, using Fresh & Easy's "Farm to Store in 24 Hours" produce program as an example;

>The grocer's role in the community, siting as examples the fact Fresh & Easy gives a local non-profit organization a $1,000 donation each time it opens a new store, which to date has amounted to $176,000 in donations to various non-profit groups in California, southern Nevada and metropolitan Phoenix Arizona, where Tesco has its 176 Fresh & Easy stores, along with the various other charitable activities it engages in;

>Environmental sustainability; which is not only one of Mason's responsibilities as CEO of Fresh & Easy but also in his position as group deputy CEO of Tesco and;

>The future of Fresh & Easy Neighborhood Market, particularly as it pertains to Los Angeles and Southern California where the chain s headquartered, although this tpic area will be limited we suspect.

For example, a we reported in this December 10, 2010 story - Fresh & Easy Neighborhood Market CEO Tim Mason Says 70 New Stores Possible in Los Angeles Area - Mason told a gathering of business, political and community leaders at a meeting of the Valley Industry & Commerce Association of the San Fernando Valley on December 9, 2010: "We've (Fresh & Easy) identified 70 opportunities [new store locations] in Los Angeles. If we can open those 70 opportunities, that will be 1,400 jobs, as well as 300 construction workers per-site. We’re eager to invest and we want to get on."

Something Mason should address

Based on our information, Fresh & Easy Neighborhood Market hasn't acquired anything close to those 70 future locations in the Los Angeles area since Mason's speech to the group. And, according to our sources, current plans at Tesco don't call for opening anywhere close to 70 new Fresh & Easy stores in the Los Angeles area between now and the end of 2012.

Therefore, it would be informative if Mason offered an update to his December 9 speech tomorrow. Was the 70 stores in Los Angeles speech in December 2010, for example just more of Fresh & Easy's grand thinking and public relations - Terry Leahy and Mason originally said there would be 1,000 Fresh & Easy stores by the end of 2012-to-mid 2013 after all; instead current plans call for about 300 stores by February 2013 - or is it grounded in reality?

Tesco in (and a little bit of) America: A Story Mason could tell

We don't think Mason will offer a history of Tesco in his speech this afternoon. However if he does, an interesting aspect of that history has to do with the influence American supermarkets had on founder Jack Cohen when he visited the U.S. in 1935 and saw what at the time was a brand new innovation - the self-service grocery store - and by that we don't mean self-service checkout.

John Edward Cohen, called Jack for short, founded Tesco in the UK in 1924. That first store was a market stall  in London's East End.

The name Tesco was first used by Cohen on tea he sold in the market stall. The entrepreneur derived the name Tesco from the initials of his tea supplier, T E Stockwell, and combined the initials with the first two letters of his last name - Cohen.

In 1935 Jack Cohen incorporated his growing food and grocery retailing business as Tesco Stores Limited.

Grocery stores were all full-service at the time. Shoppers would tell store clerks the products they wanted, many of which were in bulk form, and store employees would "fill the order," picking the packaged grocery products from sheolves high and low and scooping the bulk items like sugar and flour from bins.

When Jack Cohen visited the U.S. in 1935, a number of grocery stores across the pond were trying the then radical concept of self-service, in which shoppers "filled their own orders," choosing what they wanted from shelves, bulk bins and refrigerated cases right out on the store floor rather than located behind a counter.

Cohen was hooked.

In 1945 he converted the first Tesco store, a small shop in St. Albans UK, into his frst all self-service market. Self-service took a while to catch on with the customers and the competition but Cohen pressed on, eventually converting all his Tesco stores to the concept, his competitors following his lead. Every new Tesco store Cohen opened was self-service as well.

Jack Cohen also brought back a popular U.S. merchandising technique of the time, the "stack it (product) high and sell it cheap" display, merchandising and pricing practice that was all the rage in the American food and grocery retailing business at the time -  and still is for many discount supermarket operators.

The Tesco founder, who retired in 1973 and was replaced by Ian MacLaurin, even earned the nickname Jack "The Slasher" Cohen for the low-price-focused merchandising practice he first saw in the U.S. and which Tesco built its business and massive growth on until the mid-1970's, when under MacLaurin's leadership the retailer took a more higher-end or up-market approach to selling groceries.

Tesco has maintained the more up-market-oriented approach to the present, although beginning in 2009 it  returned somewhat (and continues to today) to its more price-focused days, mixed with the more higher-end approach, forced to do so because of the economic recession and increased competition from Walmart's ASDA, Sainsbury's, Morrisons, hard-discount chains Aldi and Lidl, and even upscale operator Waitrose, which beginning in about 2009 under CEO Mark Price started to sharpen its pricing profile and has broadened its customer base beyond higher income consumers, who historically comprised the majority of Waitrose customers.

Had Jack Cohen not visited America in 1935, Tesco would still have eventually gone from a full-service grocery store to a self-service supermarket, although most likely much later than it did.

But had the founder not made the trip in 1935, Jack "The Slasher" Cohen may never have learned about the "stack it high and sell it cheap" merchandising approach, which fueled Tesco's initial growth and put it on the path of becoming what it is today, the leading retailer of food and groceries in the UK and the third-largest seller of groceries in the world.

Therefore, although Tesco has only been physically in America with Fresh & Easy Neighborhood Market since 2006, American-style food and grocery retailing circa-1935 and beyond has been "in Tesco" since Jack Cohn's first visited the U.S. in 135 and discovered self-service and stack it high, sellit cheap merchandising.

Not only would the Jack Cohen-USA visit story make a good antidote for Tim Mason to tell when he speaks to Southern California's movers and shakers at Town Hall Los Angeles this afternoon, it's also an instructive history lesson for he and CEO Philip Clarke to recall, study and learn from as Jack Cohen's market stall shop in London's East End, turned mega-global food and grocery retailer Tesco attempts to succeed with its U.S. Fresh & Easy venture in the 21rst Century, job one being to turn a fiscal year 2010/11 loss of $300 million into break-even 20 months from now.

Related Stories

~We written extensively about Tesco group deputy CEO-Fresh & Easy Neighborhood Market CEO Tim Mason. Click on this link - Tim Mason - to read those stories.

~We've also written numerous stories about Tesco CEO Philip Clarke since he took over the corner office in March of this year.You can read those stories by clicking on his name: Philip Clarke.

~You can also read about former Tesco CEO Terry Leahy, who retired in March after 14-years as CEO of Tesco by clicking here: Terry Leahy

Just-Retired Tesco CEO Terry Leahy's First 'Angel' Investment is Online Educational Start Up Stuck On Homework

Terry Leahy (above) waves bye to employees at Tesco's corporate headquarters in Cheshunt, Hertfordshire, United Kingdom, as he leaves the office early and for the last time on March 3, 2011, after serving as CEO for 14-years. His parting words: "See you in the shops."

We said in our recent coverage about the retirement of Tesco CEO Terry Leahy, who stepped down less than three weeks ago after 14-years as the chief of the United Kingdom-based global retailer, the energetic 55-year-old wouldn't let the British sod get under his shoes for very long, and that he would be launching a new career as a private investor, including as an angel investor. Angel investors provide early funding to start up companies.

Well...Leahy, who's been doing his homework on potential companies to invest in since he announced in June 2010 he would retire from Tesco in March 2011, has already made his first angel-oriented investment. That investment is in a United Kingdom-based start-up online learning company Stuckonhomework.com, which describes itself as: "A revolutionary video based website designed to provide help for GCSE pupils when they get stuck on their homework." Think of it as and online tutor of sorts.

For those not familiar with its education system, students in England and other parts of the United Kingdom study General Certificate of Secondary Education (GCSE) over two years, from the age of 15, and take GCSE exams at the end of this period. These are the final years of their compulsory high school education. At this point, students can either leave school and get a job, or go on to further studies.

In contrast, in the United States students begin high school in the ninth grade (average age of 14-years-old) and are required to spend four years attending in order to graduate with a high school diploma, although in most states after age 16 a student can take a G.E.D. (General Equivalency) test, and if they pass it are awarded a G.E.D. high school diploma.

Start-up Stuckonhomework.com launches tomorrow, according to its founders, United Kingdom media veterans Helen Royle and Teresa Watts who, among other positions and places, have worked as executives at Britain's ITV and at the BBC.

According to Royle and Watts, the online tutor will operate on a paid subscription model. It's designed to assist GCSE students in England, Wales and Northern Ireland (to start) with their GCSE school curriculum in multiple subject areas, beginning with mathematics.

Neither Royle, Watts nor Terry Leahy have yet announced how much the former Tesco CEO has invested in stuckonhomework.com or how much of an ownership stake his investment represents. That information might have to wait to be known if and when the online learning company goes public.

Having Sir Terry, who serves as an unpaid counselor to British Prime Minister David Cameron and is one the most well-known businessmen in the United Kingdom, backing the start-up is a major plus for the two entrepreneurs. After all, the energetic Leahy is very well connected.

The investment in the educational online start up company also fits with Terry Leahy's focus on education during his tenure as Tesco's CEO. Tesco runs extensive education programs, including in the basics, for its employees, along with offering funding for employees who qualify and want to extend their education at the university level.

As the head of one of the top five companies in the United Kingdom, Leahy also spoke out frequently about the country's national education system, particularly arguing for higher standards in its schools. The majority of employees retailers hire

We recently were told by a good source that in addition to making investments in companies at home in the United Kingdom and in Asia, Leahy, who was replaced as CEO by another Tesco veteran, Philpe Clarke, has been looking at potential investment schemes, including start up companies in the environmental, health, retail, education and other sectors, in the United States, home to Tesco's Fresh & Easy Neighborhood Market, which was Leahy's idea and was launched essentially as a start up in Southern California in 2006. The first Fresh & Easy stores opened in November 2007. There are currently 169 Fresh & Easy markets in California, Nevada and Arizona.

We just happen to know of a couple food and grocery retailing-oriented start ups in the U.S. that might possibly interest Sir Terry, although we have a hunch he's had his fill of those at least for a while. But just in case - our e-mail address is on the blog.

Related Stories

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

February 28, 2011: Changing of the Guard: Clarke Takes Over the Reins as Tesco CEO Wednesday

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

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.

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

The Changing of the Guard at Tesco

News/Analysis/Commentary

Most of the talk (and wins) at last night's Academy Awards gala in Hollywood, California was about the multi-Oscar Nominated movie "The King's Speech," which nabbed four wins out of 12 nominations, including for Best Picture. British actor Colin Firth also won the best actor Oscar for his portrayal of a proud yet stuttering King George VI in the hit film.

But later today across the pond at Tesco's corporate headquarters in Cheshunt, United Kingdom employees and friends will be celebrating another favorite British son of Irish ancestry, Terry Leahy (pictured at top), and likely asking the retiring CEO to make his own speech or two, as the staffers at the company he's lead for 14-years not only celebrate his retirement but also Sir Terry's 55th birthday, which is today.

There will no doubt be cake and beverages at the Tesco campus today, along with a few gifts for Sir Terry, as in addition to celebrating his birthday it will be his last official day in the office before he turns over his pinstriped grocery apron and corner office to director of international operations and information technology and incoming CEO Philip Clarke, who not only currently lives in the same neighborhood as Leahy but was also born and raised in the same city, Liverpool, as the man he's replacing, and started with Tesco over three decades ago as a store stock clerk, just like the retiring CEO did.

Not that Sir Terry needs any gifts. As we reported on Friday, Leahy gave himself a parting gift last week, trousering about £5,174,751.1 (pounds), or $8,357,223 million (U.S.) in stock options - perhaps as a small retirement nest egg or the start of his first private investment fund. The outgoing CEO has said one of the things he will do after he retires from Tesco will be private investment, including perhaps as an angel investor for small start-ups. [See- February 25, 2011: A Parting Gift: Retiring Tesco CEO Terry Leahy Exercises Options and Sells Nearly Three Million Shares of Company Stock

When it comes to the uncanny similarities between outgoing CEO Leahy and incoming CEO Clarke, some observers might say..."Meet the new boss, (almost) the same as the old boss." But despite their respective Liverpool origins and other similarities, Leahy and Clarke are different in many ways.

Clarke, however, must be the same as Sir Terry in the one way that ultimately counts: Ensuring Tesco remains the dominant retailer in the United Kingdom, along with becoming the second-largest global retailer, after Walmart, which has been Leahy's and thus the Tesco board's goal, in tandem with his fierce 14-year battle to make Tesco the UK's retailing top dog, which it is.

As he departs the company he's been with for over three decades, Sir Terry leaves Tesco with a market share (about 31%) that's nearly equal to that of its two leading competitors, Walmart-owned ASDA and Sainsbury's, which dominated Tesco in the sales of food and groceries in the UK when Leahy took the helm 14-year's ago.

Like him or not - and most people do like him - as the CEO of Tesco for the last 14-years Terry Leahy has been a combination overall solid strategic thinker (the corner office executive he became) and street fighter (the stock boy from Liverpool he started as).

For example, he recognized the importance of making Tesco a significant global retailer, particularly moving into emerging markets in Eastern Europe and Asia, long before most grocers, including all but a couple in the U.S., even thought about the concept. Today Tesco is one a just a handful of truly global food and grocery chains.

Back home in the UK it was under Leahy's leadership that Tesco basically launched a retailing version of carpet bombing (the street fighter) in terms of opening stores of various sizes in every city, town and village in the nation. Every municipality in the UK today has at least one Tesco-owned store. Most have many.

This strategy includes multiple formats, from superstores to the small Tesco Express convenience-oriented grocery markets, along with building the stores from-the-ground-up along with converting nearly every imaginable type of commercial building, including numerous pubs, into Tesco-owned stores. There's even a former church building in the UK that's today a Tesco Express store. Tesco kept the church facade in place and built around it.

Leahy has made mistakes, of course - who hasn't after 14-years as CEO of a major retail chain. But the successes out weight the mistakes overall, in our analysis.

But most of Sir Terry's mistakes, in our analysis and opinion, are more recent and have to do with Fresh & Easy Neighborhood Market USA, which is his baby, but now Philip Clarke's responsibility.

Sadly, one of Leahy's biggest mistakes vis-a-vis Fresh & Easy, in our analysis and opinion, is that he didn't make a number of significant changes that have been and are needed since the first stores opened in November 2007. We aren't going to detail those changes here. If you read through the three-plus years' worth of stories and posts in Fresh & Easy Buzz, you'll find numerous examples of which we speak.

But we also give Sir Terry credit for having the balls to launch a from-scratch food and grocery chain in America, focusing it on California, which not only is the biggest food and grocery retailing market (state) in the U.S. but also among the most competitive, along with being a very expensive place to launch a new chain.

Of course, one can reasonably argue that what we call "balls" is just another word for foolish. And there's plenty of room to argue that doing what Leahy and Tesco did with Fresh & Easy, and where they did it in the U.S. - California, Nevada and Arizona - is mostly folly.

But tomorrow is Sir Terry's birthday. So we wish the "happy warrior of retail" an enjoyable one, along with a fun and productive retirement.

Leahy leaves a fairly big executive grocery apron for Philip Clarke to fill. But he also leaves a big and expensive challenge, and a bit of a mess - Fresh & Easy Neighborhood Market USA - for the incoming CEO.

But If Clarke can look at Fresh & Easy with a fresh set of eyes, which it very much needed, make the needed changes, which include needed strategic as well as other changes, and get the fresh food and grocery chain to break-even by the end of Tesco's 2012-13 fiscal year, which is for all practical purposes the end of December 2012, then he will likely earn his Tesco wings.

Tesco says it expects in a few months to report a loss for Fresh & Easy in the same range as last year's loss, about $250-259 million for the current (2010/11) fiscal year, which ends tomorrow. Tesco reported a mid-year loss of $151 million for Fresh & Easy. There are currently 164 Fresh & Easy markets in California, Nevada and Arizona. [See - October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market.]

But first Philip Clarke, who recently returned from a visit to America and Fresh & Easy Neighborhood Market [February 23, 2011: Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market] has to decide if he really wants to keep Sir Terry's creation, Fresh & Easy, operating, and losing millions of dollars each week, for another two years.

Clarke has said publicly he and Tesco deputy CEO and Fresh & Easy Neighborhood Market CEO Tim Mason are four square behind Fresh & Easy and plan to achieve the goal of break-even in two years. But we believe the jury of one (Clarke's mind/decision-making process) is still out on whether he will stay the course or pull the plug on Fresh & Easy USA before the end of Tesco's fiscal 2012/13.

Stay tuned.

The Changing of the Guard at Tesco: Related Stories

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.

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

Pictured above: Retiring Tesco CEO Terry Leahy (middle) listens to British Prime Minister David Cameron (left) as the two men, along with Peter Nears of Peel Holdings (right) tour the £4.5 billion Wirral Waters development on January 6, 2011 in Wirral, England. Wirral Waters, which is designed to develop and use the mostly unused dock space on the site, is the biggest regeneration development of its type in Britain. Click here to learn more about the project. Sir Terry Leahy is a member of the City Region Local Enterprise Partnership, which is involved in the Wirral Waters regeneration development. Cameron met with the board on January 6. [Photo credit: WPA Pool/Getty Images Europe.]

The Changing of the Guard at Tesco
News/Analysis/Commentary

Outgoing Tesco CEO and director Sir Terry Leahy will have a little walking around money to spend when he retires from the United Kingdom-based global retailer in March. Tesco, the third-largest retail company in the world, owns El Segundo California-based Fresh & Easy Neighborhood Market in the U.S., along with having stores in the UK, Europe and Asia.

On Wednesday (February 23, 2011), Leahy, 55, who's been CEO for 14-years and joined Tesco over three decades ago as a teenager, exercised stock options on 2.996.032 million shares of Tesco plc stock at various option prices, and sold the shares, resulting in a tidy profit for the man who's so closely associated with the UK-based retailer that he's often referred to in Britain as "Tesco Terry," according to a regulatory filing issued yesterday by the company. The options were acquired by Sir Terry under the company's Executive Share Option Scheme. [The regulatory filing is here.]

Based on our calculations, the exercising of the options and sales of the shares on Wednesday by Leahy, at the prices noted in the regulatory filing linked above, resulted in a pre-tax payday for the retiring CEO we estimate to be around £5,174,751.1 (pounds), or $8. 357. 223 million (U.S.).

Our estimate is based on the data provided in Tesco's regulatory filing news release issued yesterday. We arrived at the estimated figures by multiplying the number of shares by the difference in the selling price and the option price. We emphasis that ours is just that - an estimate.

When he retires as CEO next week, Sir Terry will be severing all his formal ties with Tesco. He isn't staying on as a non-executive member of Tesco's board, for example, nor is he remaining at Tesco in any advisory capacity.

Philip Clarke, who is Tesco's CEO-designate and its director of Europe and Asia operations and corporate information technology will assume the CEO position from Leahy as part of a formal succession process that's been going on at the company since June 2010.

When he and Tesco announced his March 2011 retirement plans last summer, on June 8, 2010, Leahy mentioned that one of his post-retirement plans was to become a private investor. Perhaps the exercising of the options on Wednesday and the sale of the resulting shares will comprise the first official fund Sir Terry creates and puts to work when he officially becomes "investor Leahy," when he retires next week? Leahy holds additional Tesco stock, which he's accumulated over many years.

Outgoing Tesco CEO has also been asked by British Prime Minister David Cameron to work on a number of economic and environmental issues in an advisory capacity for his administration, something Sir Terry has already started doing a bit of. Leahy supported and campaigned for Cameron over Gordon Brown in the 2010 election.

We suspect Leahy to get more involved in public service post-retirement, including further advising and helping the current British PM. But we doubt Leahy has any desire to be appointed to an official government position in the Cameron government, although we could be wrong.

After all, Sir Terry is only 55-years old. He's spent 14-years heading Britain's most well-known company - Tesco - which not only is the number one retailer of food, groceries and general merchandise in the UK, it also has a banking and finance division (Tesco Personal Finance and Tesco Bank), sells insurance, is a major mobile phone carrier and more. And as a result of being "Tesco Terry" all these years, he has among the highest recognition levels of any single person in the nation.

On top of that, he's become known in the UK and globally as a leader in the climate change reduction movement, along with being seriously involved in other environmental conservation issues.

If you add up all the factors noted above - the right age (55), high recognition level among the public, solid business and executive experience at home and globally, knowledge of economic and environmental issues, a proven jobs creator, generally well-liked as Tesco's CEO - some might suggest they're not bad credentials for getting into politics - perhaps getting elected as an MP, then using that position to become Prime Minister.

We don't think that's the post-retirement career path outgoing Tesco CEO Terry Leahy has in mind - but perhaps he should look into it.

After all - he doesn't need the money post-Tesco. And the UK government could sure use a political leader or two who actually has created a job or two. Or in the case of soon-to-no-longer be "Tesco Terry" but rather just plain old Sir Terry - one who's created tens of thousands of jobs at home during the 14-years he's been the CEO of Tesco, which today is the largest private sector employer in the UK.

Incoming Tesco CEO Philip Clarke Visits America - And Fresh & Easy Neighborhood Market

The Insider - Heard on the Street
The Changing of the Guard at Tesco

In October 2010, a few months after being named CEO-designate of Tesco on June 8, Philip Clarke (pictured at top), who officially takes over the corner office from Sir Terry Leahy at the global retailer's headquarters in Cheshunt, Hertfordshire, United Kingdom next week, said he planned to visit the U.S. and take a top-to-bottom look at Tesco's fledgling Fresh & Easy Neighborhood Market chain, which after opening two new stores in Southern California today now has 164 fresh food and grocery stores in California, Nevada and Arizona.

In a column on June 12, 2010, a few months before incoming Tesco CEO Clarke publicly mentioned his plans to visit Fresh & Easy's headquarters in El Segundo, California and a sampling of the stores in California, Nevada and Arizona, I suggested he do just that, asking in the column: Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

In another column, on October 2010 - Incoming Tesco CEO Philip Clarke Needs to 'Imagine' When it Comes to Fresh & Easy Neighborhood Market USA - I suggested not only how important such a visit, both for Philip Clarke's good as incoming CEO and that of Tesco and its Fresh & Easy chain's future (and for Tesco investors), but also offered a suggestion to Clarke about how he might approach the retailer's U.S. operations, as you will see if you read the column at the link above.

Following Clarke's signing off late last year on Fresh & Easy Neighborhood Market CEO Tim Mason's strategy designed to get Tesco's U.S. fresh food and grocery chain to break-even, there was much speculation in the press and among analysts, particularly in the UK, as to whether or not Clarke would make a trip to visit Fresh & Easy Neighborhood Market's operations and stores prior to becoming CEO in March. Clarke sparked some of this speculation himself when a couple UK publications he gave interviews to reported him saying he didn't need to visit Fresh & Easy in order to sign off on the strategy noted above.

But I, and Fresh & Easy Buzz, have said all along that Philip Clarke would be making such a trip to America before he takes over as Tesco's CEO.

And in my column today, while I can't report on the state of Mr. Clarke's "imagination" vis-a-vis Fresh & Easy USA (although I can report on a couple of his perceptions and emotions following the trip, which I will do at the end) - I can report that the Tesco CEO-designate has made a trip to the United States, including spending time at Fresh & Easy Neighborhood Market's corporate headquarters in El Segundo, along with visiting some Fresh & Easy stores in California, Nevada and Arizona, as well as a few stores operated by competitors.

Incoming Tesco CEO Clarke's just-completed trip to the U.S., which included an investor relations roadshow and visits with key Tesco investors in the U.S., began on February 6, when he landed in New York. He left the U.S. on February 15, arriving back home in the United Kingdom on February 16.

After spending a couple days in New York, Clarke and company hit Boston (on February 8); Omaha, Nebraska - home of major Tesco investor Warren Buffett - Denver, Colorado; and Sante Fe, New Mexico (all on February 9), where he and his team had a meeting with investors that afternoon. (Yes, there was some informal future Fresh & Easy market region scouting going on - but it wasn't the primary or even secondary reason for the visits to those cities, according to my sources.)

From New Mexico, Clarke and his team flew to San Francisco, arriving in the City-by-the-Bay on February 10. Tesco has two Fresh & Easy stores set to open soon in San Francisco, along with a third location waiting in the wings. And as Fresh & Easy Buzz has reported, the retailer is searching for additional locations in the city. [See - February 1, 2011: Tesco's Fresh & Easy Neighborhood Market Still Plans April-May 2011 Openings For First Two San Francisco Stores; and January 26, 2011: Fresh & Easy Neighborhood Market is On A Mission - In San Francisco's Mission District.]

After San Francisco, Clarke flew to Southern California, using it as his base from February 10 -to- 15 to visit Fresh & Easy stores in the region and in Nevada and Arizona, along with spending time at Fresh & Easy's corporate headquarters in El Segundo, where he met with Tesco director and Fresh & Easy Neighborhood Market CEO Tim Mason, who will get the added title of Tesco deputy CEO on March 1, and various executives and headquarters employees.

Philip Clarke also visited Fresh & Easy's distribution center and fresh foods production kitchen in Riverside Country, California on Valentine's Day (February 14), where among other activities he taste-tested a number of fresh-prepared meals and side-dishes sold in the Fresh & Easy markets. Word is the Chicken Fontina and Broccoli and Cranberry salad were his favorites.

Visits to some Fresh & Easy stores, and those of a few of its competitors in Southern California, metro Las Vegas, Nevada and metro Phoenix, Arizona, were high on Clarke's itinerary sheet during his visit, as I noted earlier.

Below are the highlights of some of incoming Tesco CEO Clarke's store visits during his time in the Western USA:

>Metro Phoenix, Arizona: On February 11, Clarke visited at least three Fresh & Easy markets in metro Phoenix, along with a Kroger Co.-owned Fry's supermarket and a store operated by locally-based grocery chain Bashas'.

>Metro Las Vegas, Nevada: The following day, February 12, Clarke visited a number of Fresh & Easy stores in metropolitan Las Vegas, Nevada, including the unit at Durango and El Capitan, where he admired the display of $10 per-dozen roses, which Fresh & Easy Neighborhood Market was advertising in its Valentine's day ad circular and promoting in-store for the holiday week. While in Las Vegas, Clarke also visited a few competitor's stores, according to sources.

>Southern California: Back in Southern California, the incoming Tesco CEO toured a number of Fresh & Easy Neighborhood Market stores in the region, where as of today Tesco operates 101 of its 162 small-format fresh food and grocery stores.

Among the Fresh & Easy stores Clarke visited in Southern California were the Manhattan Beach unit, which is the closest Fresh & Easy store to corporate headquarters in El Segundo - and the one Fresh & Easy CEO Tim Mason likes to take guests to visit. The store, which is one of the better-performing Fresh & Easy markets, also recently acquired a new produce department, along with a new floor. Word is Clarke likes the Manhattan Beach store, which is located just a head-of-lettuce-throw-away from a Trader Joe's market. [Take a look at the store, and the nearby Trader Joe's, here.]

Additionally, the soon-to-be-CEO visited a Fresh & Easy store in Burbank, which has an in-store coffee shop/bakery, something the grocer is testing. Interestingly, its also something Fresh & Easy Buzz first suggested nearly three years ago, and has mentioned since, that Fresh & Easy Neighborhood Market should include in some of its stores. The Burbank store (at Olive and Verdugo) opened on April 7, 2010. It was the 150th Fresh & Easy market opened by the chain. Since the Burbank store opened in April 2010, the grocer has opened 12 additional stores, nine of which have been opened so far this year.

Clarke also toured a Whole Foods Market store in Southern California while in the region; a visit he's reported to have proclaimed to be "quite fun," according to an excellent source.

Word is, not only was this the first time incoming Tesco CEO Philip Clarke has visited any of the Fresh & Easy stores, its also the first time the United Kingdom native, born and raised in Liverpool, England just like outgoing Tesco CEO Terry Leahy was, has visited grocery stores at all in the Western United States. Clarke has been with Tesco since 1974.

That Clarke hasn't visited the Fresh & Easy stores prior to his recently-concluded trip isn't all that unusual though. In his current positions as chief of Tesco's European and Asia retail operations and head of corporate IT, the soon-to-be-CEO wasn't directly involved in the planning, launching and operations of Fresh & Easy in the U.S. Instead, the U.S. chain, which was the idea of outgoing CEO Leahy, has been the focus of Tesco director and Fresh & Easy Neighborhood Market CEO Tim Mason, who as his CEO title reflects, has had charge of the launch and operations, reporting directly to Leahy.

Mason will be officially adding the title Tesco deputy CEO to his resume, along with retaining the Fresh & Easy CEO title, on March 11. However, he will report to incoming CEO Philip Clarke, who will have full responsibility for running Tesco's growing global retailing empire.

Tim Mason will add a couple new corporate duties to his management shopping cart though, taking responsibility for Tesco's branding and its climate change initiatives. Prior to coming to the U.S. to start up Fresh & Easy Neighborhood Market in 2006, Mason was Tesco's corporate marketing chief, as well as a member of the company's board, a position he retains.

The sixty-four-thousand-dollar question - actually the $1.5 billion question, since that's about what Tesco has invested in Fresh & Easy so far - about Philip Clarke's 10-day visit to the U.S. and his five days at Fresh & Easy Neighborhood Market's headquarters and in the stores is: What did he learn? And the logical follow on to the question is: Did what Philip Clarke learn make him feel more positive or less positive about Fresh & Easy's chances of breaking even by the end of Tesco's 2012/13 fiscal year? The 2012/13 fiscal year-end is a little over two years from now. Clark is one the record as saying Fresh & Easy will break-even by then.

It's really a rhetorical question though, as Philip Clarke is the only person who knows the actual answer to those two questions. And his answer, if asked such a set of questions, is rather predictable to me, as it should be - positive and affirmative.

But before he left Los Angeles to fly back to London on February 15, soon-to-be Tesco CEO Philip Clarke attended a "City Meeting" at Fresh & Easy Neighborhood Market's headquarters in El Segundo, California, not far from that Manhattan Beach store he visited and liked.

City Meetings, in Fresh & Easy-speak, are regular events in which the grocer brings in store management and others emplyees from various regions for an event/meeting in which all sorts of things are discussed, such as region and store performance, new company initiatives, new product introductions and the like. The meetings are colorful events. Fresh & Easy employees often dress up in outfits, tied to a particular theme, food is served, and various group activities and exercises are conducted. The meetings are designed to be informative - but also to be motivational and team building exercises.

As I mentioned in the beginning of my column, I can't personally speak to Philip Clarke's "imagination" vis-a-vis his trip to America and outlook about Fresh & Easy post-visit - nor can I speak to the two questions posed above except in the ways I have. All I can do is report what the soon-to-be Tesco CEO said before he departed for London from Los Angeles on February 15, 2011 after that City Meeting, which is: "Leaving LA for London after attending the city meeting at El Segundo - great trip, good insights and lots of ideas. Invigorating."

Tesco's current fiscal year ends on February 28, 2011. The retailer has said it expects to report a loss for its Fresh & Easy USA chain for the full fiscal year in the $250 -to- $259 million range, about the same loss as it reported in the prior fiscal year, despite adding considerable sales over the past fiscal year. In October Tesco reported a half-year loss for Fresh & Easy Neighborhood Market of $151 million. [See - October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market.]

But now the hard work begins for Clarke, who's most-challenging inheritance from outgoing CEO Terry Leahy is Fresh & Easy USA. Clarke must take the good insights, wealth of ideas and invigoration he picked up during his visit to America and Tesco's U.S. outpost and use his imagination and other skills to turn them into a plan, along with Tim Mason and his team at Fresh & Easy, that results in break-even for the fledgling Fresh & Easy chain by the end of Tesco's 2012/13 fiscal year, which is something Clarke no doubt assured the Tesco investors he spent time with on the first leg of his U.S. trip is going to happen - and happen on time. And that's a "fresh" task for Clarke and team that isn't going to be "easy" to achieve.

Stay tuned.

- The Insider

Related Stories

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.

Read (click on the green link) past columns from 'The Insider' columnist at this link - The Insider.

Fresh & Easy Neighborhood Market to Install Solar Energy Systems Atop Nine Arizona Stores in March 2011

'Green' Food and Grocery Retailing

We've suggested in past stories on the blog that Tesco's Fresh & Easy Neighborhood Market should look into installing solar panels and solar energy systems on the roofs of as many of its 155 fresh food and grocery stores as is feasible, since not only are the small-format markets well-suited for solar because of their size - 12,000 square-feet on average - and locations - sunny Southern California, metropolitan Las Vegas, Nevada and metro Phoenix, Arizona - but also because doing so would fit well with the grocer's attempt to position the chain as a "green" or sustainable grocer, which is one of United Kingdom-based Tesco's strategic goals with Fresh & Easy.

Adding rooftop solar to some of the Fresh & Easy stores also fits well with what Tesco did when it constructed its 850,000 square-foot Fresh & Easy Neighborhood Market distribution center in Riverside County, (Southern) California in 2007, which was to invest $13 million to install 500,000 square-feet of solar panels, about the size of five football fields, on the roof of the facility.

The massive solar array provides about a fifth of the total energy for the distribution center, according to Fresh & Easy Neighborhood Market. Fresh & Easy's website has a live feed from the solar installation at the Riverside County distribution center, reporting in real time the performance of the panels. You can view it here.

Lastly, extending solar from the Riverside County distribution center's roof to store rooftops, in addition to adding to Fresh & Easy's credibility in the Western U.S. as a "green" grocer, also fits in well with parent company Tesco's strategy of being known as a global sustainable retailer and leader in climate change reduction, which is something outgoing CEO (March 2011) Terry Leahy has made a major corporate and cultural focus during the last few years.

Since extending solar from the rooftop of the Riverside County distribution center to the roofs of some of the small-format Fresh & Easy stores is something we've discussed in Fresh & Easy Buzz in the past, a press release distributed by Tesco's Fresh & Easy Neighborhood Market earlier today on just that topic caught our collective eye.
In the release, Fresh & Easy Neighborhood Market announced it plans to install solar systems on the roofs of nine of its stores in metropolitan Phoenix, Arizona beginning in March 2011.

The project will be in partnership with REC Solar, according to the news release.

REC Solar was founded in 1997 and is one of the leading solar-electric energy companies in the U.S. It's headquartered in California and has offices in Arizona, Colorado, Oregon, Hawaii and New Jersey.
Here's what Tesco's Fresh & Easy says about the solar power systems to be installed on the roofs of the nine stores in Arizona, based on information provided by REC Solar:

>The systems will generate more than 410 kW of solar energy.

>The systems will produce an estimated 620,000 kilowatt-hours (kWh) annually, the equivalent of reducing 22 million pounds of CO2 emissions – or removing 28 million car-driven miles – over the next 25 years.

>The solar energy systems to be installed on the roofs of the nine stores in Arizona will provide approximately 20 percent of the stores' total energy needs, according to Tesco's Fresh & Easy.

The Arizona Commerce Authority is a partner with Tesco's Fresh & Easy on the project to install solar systems on the roofs of the nine Arizona stores. The quasi-public organization, which was established in June of this year, offers various renewable energy-focused financial and tax incentives to companies doing business in Arizona for projects such as Fresh & Easy's solar system initiative, according to Don Cardon, president and CEO of the Arizona Commerce Authority.

"Fresh & Easy's decision to become more energy independent is an example of why the Arizona Commerce Authority is focused, in part, on facilitating investment in the renewable energy sector and on job creation and training. Arizona has the potential to become the solar capital of the world and lead the nation as solar demand continues to grow globally and intensify nationally," Cardon, says.

The solar systems also will provide some real cost-savings, based on the 20% per-store in energy savings Tesco's Fresh & Easy says the systems will achieve, at the nine Arizona Fresh & Easy stores set to get the units in March 2011. Look at it this way: If the average monthly utility bill per-store is $5,000, for example, the 20% reduction in that monthly expense because of the added rooftop solar system results in a savings of $1,000 per-month on the stores' cost-side. That's helpful from a bottom-line, P/L standpoint.

Installing the solar systems in the nine Arizona Fresh & Easy stores in March 2011 is also good timing for Tesco director and Fresh & Easy Neighborhood Market CEO Tim Mason.

In March of next year Mason will assume the title of co-CEO of United Kingdom-based Tesco. He will remain in the U.S. as CEO of Fresh & Easy but will add a couple additional Tesco corporate responsibilities to his portfolio, according to the company. Those new global responsibilities will be in the areas of marketing/branding and corporate sustainability/climate change initiatives. The latter new area of responsibility - corporate sustainability and climate change initiatives - being the one in which the Fresh & Easy nine-store solar energy system project offers the good timing for.

Mason is gaining the new title and added responsibilities due to the retirement of Tesco CEO Terry Leahy, who is leaving the United Kingdom-based global retailer in early March of next year.

Tesco executive Philip Clarke, who's currently responsible for Tesco's business in Europe and Asia, along with corporate information technology, is taking over as CEO in March 2011. Although Mason will have the title of co-CEO, Clarke will have the CEO title and function as Tesco's chief executive officer. [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.]

Installing the REC solar energy systems on the roofs of the nine stores in Arizona in March of next year, the same month he assumes responsibility for Tesco's global climate change initiatives, which is something outgoing CEO Leahy has made a major corporate focus, therefore affords good timing for Mr. Mason from a variety of perspectives, including enhancing his "green retailer" credentials. [See - December 31, 2008: 'Green' Retailing: Tesco Scores Second Overall, Number One Among Food and Drug Chains, in Ceres Coalition's Climate Change Corporate Scorecard.]

"With the success of our solar panel installation on our distribution center, we're confident these systems on our stores will help cut down on energy costs even further," Tesco director and Fresh & Easy Neighborhood Market CEO Tim Mason said in the press release today. "Through innovations like these, Fresh & Easy has been able to cut back on the amount of energy and water we use, efficiencies that are better for the environment and help us keep our prices low for our customers."

Below are the locations of the nine Arizona stores Tesco's Fresh & Easy Neighborhood Market says will get rooftop solar energy systems beginning in March 2011:

• Alma School & Elliot
  Chandler, Arizona
  
• Crismon & Guadalupe
  Mesa, Arizona
  
• Sossaman & Southern
  Mesa, Arizona
  
• Higley & Ray
  Gilbert, Arizona
  
• 107th Ave. & Thomas
  Avondale, Arizona
  
• 19th Ave. & Baseline
  Phoenix, Arizona
  
• 19th Ave. & Glendale
  Phoenix, Arizona
  
• 32nd St. & Greenway
  Phoenix, Arizona
  
• Camelback & 83rd Ave.
  Phoenix, Arizona