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

Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

The Insider: Heard on the Street

[This is the first in a series of columns to be published between now and the end of this year in which our "The Insider" columnist will be exploring what potential changes new Tesco plc CEO Philip Clarke, currently head of the retailer's European and Asia operations, might make with Tesco's Fresh & Easy Neighborhood Market USA after he assumes the CEO position on March 11, 2011. - Editor]

When Philip Clarke (pictured at top), the current head of Tesco plc's European and Asian retail operations, takes over for CEO Sir Terry Leahy in March of next year he will bring to his new job as the leader of the third-largest retailer in the world a very different skill set, tool kit and experience-based mind-set to the position, compared to that of Sir Terry. CEO Leahy announced his retirement on June 8. See here: [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.]

Clarke was identified many years ago by Leahy and the Tesco board as the logical heir-apparent for the CEO position when Sir Terry retired - although most thought it would be much later rather than so soon. Leahy will be 55-years old when he rites in March 2011. In fact, the heir-apparent status is one of the reasons Clarke was given the position as chief of Tesco's European and Asian operations, which has been where the retailer's international operations - and growth - have been most focused over the last few years. Compared to Europe and Asia, Fresh & Easy USA is small potatoes, for example.

But Philip Clarke, called in the UK retailing trade "Mr. Supply Chain" because of his expertise and love of the detailed technical aspects of the business, is a much different type of executive than Sir Terry Leahy is.

Although a reserved and actually somewhat shy man - he's a thinker more than a gabber - Leahy is what you might call an autodidactic. He harbors a deep reservoir of knowledge across many fields. Ask him a question, and not just about retailing, and you're likely to get an immediate and learned answer. For example, when Leahy wanted to learn more about climate change he consulted scientists from the UK's top universities and research centers, read extensively, and sponsored academic seminars on the topic. The result: Ask Sir Terry about nearly any aspect of climate change and expect to get a well-informed answer, if he's in a talking mood.

In the business of food and grocery (and general merchandise) retailing he's arguably the most eclectically self-taught executive out there. And Terry Leahy puts his knowledge into action, implementing policies at Tesco like its "carbon footprint" shelf sign program, which shows shoppers the relative "carbon footprint" of a given food or grocery item, from the field or factory to Tesco's store shelves. Leahy, and thus Tesco, is way out in front of most other food and grocery retailers with the program.

Terry Leahy also is a grocer who's developed an uncanny ability to understand politics, particularly UK politics. (He's missed the boat a bit when it comes to U.S. politics however.) That's self-taught as well. For example, he figured out a couple years after becoming CEO that hiring well-connected former MP's and staffers - not to mention ex-PM Tony Blair for a couple missions - was the best way for him to expand in the UK to the degree he desired (and that's been to a mega-degree), despite the objections of so many groups and individuals. He's also used these folks to help him maintain and burnish Tesco's reputation in the UK among key opinion leaders and other stakeholders.

Sir Terry has also used this strategy for Tesco's international business, but to varying degrees of success. For example, Tony Blair's missions for Tesco have been international ones in large part, in places where he has gold-plated relationships.

In the U.S., Leahy hired not a marketing-oriented public relations firm to represent Fresh & Easy Neighborhood Market, although they have a marketing-oriented PR division of sorts, but instead a very politically-connected one. That firm, APCO Worldwide - which has offices in Sacramento, California; Chicago, Illinois; New York City; Seattle, Washington; Raleigh-Durham, North Carolina; and Lexington, Kentucky, in addition to its headquarters office in Washington, D.C. - has among its principles and senior staff some of the most politically connected executives in the PR business, both Republicans and Democrats. [Suggested Reading - September 10, 2008: Tesco Fresh & Easy Neighborhood Market's Politically-Connected Public Relations Firm APCO Worldwide.]

A staffer from APCO's Sacramento office, Brendon Wonnacott, served as Tesco Fresh & Easy's corporate spokesman from 2006 -to- April 2009, when Tesco's Fresh & Easy Neighborhood Market hired him to be it's in-house PR executive and spokesman, and a company employee, which he currently is. APCO Worldwide still works for Tesco's Fresh & Easy though. Wonnacott does the day-to-day, out-front work, but its the access to the principles and senior staffers that led Tesco initially to hire APCO as their PR firm of record.

APCO's overall performance has been a mixed bag for Tesco's Fresh & Easy, but it has been an important part of Tesco's being able to fight off the at times strong campaign from the United Food & Commercial Workers (UFCW) union, which since 2007 has been trying to unionized store-level Fresh & Easy Neighborhood Market employees.

Philip Clarke, no shrinking violet by any means in the intellectual department, is more of an operations-oriented - hence the "Mr. Supply Chain" nickname - and an "I'll get back to you after consulting the appropriate department executive" kind of guy than Sir Terry is. By this I mean that whereas Leahy is more apt to give you that informed answer to your question right on the spot, Clarke isn't likely to do that. Rather, he's going to consult the organization chart and, if the question is on marketing, ask the senior marketing executive, if it's on U.S. food retailing, he will probably call Fresh & Easy CEO Tim Mason, and if its about British politics, climate change, the rules of soccer, farming or another such topic - all those Sir Terry can answer pretty well from self-knowledge - it's hard to say what his response would be, although those who know him well can almost guarantee it wouldn't be a Sir Terry-style response.

All this isn't to suggest one man is smarter than the other. Nor is it to suggest one has a superior style to the other. Rather, each has his own style based on their experiences, education, self-learning and experience within Tesco, where both of the men - who both come from similar working class backgrounds in Liverpool, England - have spent the majority of their careers.

No longer as Fresh, certainly not Easy

However, when it comes to Tesco's Fresh & Easy Neighborhood Market in the U.S., these differences will matter.

Fresh & Easy, which currently has 159 stores in California, Nevada and Arizona, is Sir Terry's baby. He made the decision to come across the pond to America, approved the format, named Tim Mason to head it up, has approved investing nearly $1 billion in it so far, and has defended it, albeit much less aggressively in the last year than in 2007-2008. In other words, Fresh & Easy is the house Terry Leahy built, with Tim Mason as the general contractor.

In contrast, Philip Clarke will come to Fresh & Easy USA on March 11, 2011 as a relatively blank slate. Sure, as a Tesco key executive and CEO heir-apparent he's been involved in discussions on and meetings about Fresh & Easy, perhaps even offering a suggestion or two. But to my knowledge he's had nothing to do with the decisions about or operations of Fresh & Easy from 2006 to today.

It's been Terry Leahy's and Tim Mason's project. And Leahy has delegated nearly all of the decisions about the U.S. fresh foods and grocery chain to Mason, which was part of the agreement between the two men when Mason agreed to come to America to start Fresh & Easy up. That's in part why Mason's title at Fresh & Easy is president and CEO rather than something else, like president or director of Tesco's U.S. operations.

Unlike Sir Terry, who as CEO has had a broad range of responsibilities, Phil Clarke has been hands-on involved in international retail operations in Europe and Asia for these many years. He will bring this fresh and immediate experience, and the skill set and tool kit acquired in doing it, with him to the office-of-the-CEO at Tesco'in the UK. He will assume those broad responsibilities of CEO, but his present job will influence it.

With this fresh operational experience in his mind, one has to believe Clarke will want to make some changes with and at Fresh & Easy. For example, Tesco recently reported a loss of $253 million for Fresh & Easy for fiscal year 2009/10, and CEO Leahy said Fresh & Easy will lose about that same amount in fiscal year 2010/11, which ends in early 2011. That will give Tesco about $750 million in operational losses for Fresh & Easy since the first stores opened in 2007. At the end of this fiscal year, which started in February, Tesco will have been operating the chain for over three years.

With Fresh & Easy Neighborhood Market entering its fourth year of business at the end of fiscal year 2010/11 - and frankly with nothing we can see at this point in time improving its fortunes, including an improved economy - will new CEO Philip Clarke be willing to allow things to continue as business as usual for yet another year?

I don't know. But what I do know is that most executives who've just come from a long stint running a very successful international operation, as is the case for Clarke with Tesco's European and Asian retail divisions, is going to want to know what Tim Mason - who will become Deputy CEO on March 11 but remain in the U.S. running Fresh & Easy, according to Tesco - and his team are going to do differently going forward than what they have been doing to turn around Fresh & Easy's fortunes. Tesco can only use the recession argument, the shelf life of which has already expired, for so long, after all.

CEO Mason and his senior executive team said in presentations in 2006 and 2007 that Fresh & Easy would achieve average per-store sales of $200,000 a week after a few years of operations. In November of this year it will be three years since the first batch of stores opened, and the chain's average per-store sales isn't even half of that $200,000. Those who know the food and grocery retailing business in America will likely agree with me when I say going from $100,000 a week in average per-store sales (which Fresh & Easy isn't even doing currently) to $200,000, in say two or even three year period, is a near miracle. Even if Fresh & Easy were to achieve that, it would mean hitting that $200,000 average per-store sales number, which Tesco has identified at where it needs to be in order to make a profit with Fresh & Easy, not until mid-to-late 2013 (three years from now). And remember, I said "even if they could achieve it." Therefore, something has to be done to jump-start Fresh & Easy. And the naming of a new CEO at Tesco plc is probably the right time to do it, especially from that new CEO's perspective.

One change - but a big one

One change new CEO Philip Clarke could make, say in late 2011, would be to call Deputy CEO Tim Mason back to the UK, with Mason's blessing of course, because Mason's new added duties as of March 11, 2011 - which in addition to remaining CEO of Fresh & Easy will include responsibility for all of Tesco plc's global marketing and branding; corporate values and climate change initiatives - require him to work out of Tesco's global corporate headquarters in the UK for the good of the entire corporation.

After all, might it not be difficult to run the marketing and branding functions of UK-based Tesco, which derives about 70% of its sales in the UK and the other about 28% from its Europe and Asia operations, out of Southern California?

And wouldn't it be more practical for a Deputy CEO in charge of corporate values to direct those values from the company's corporate seat, in the UK, rather from El Segundo, California?

And since nearly 100% of Tesco's tens of billions of dollars a year in sales (accept the $450 million a year in sales at Fresh & Easy) come from its European and Asia operations, which means that's were the retailer leaves the bulk of its carbon footprint, one might suspect running the corporate climate change initiative, which have been a big part of CEO Leahy's focus, from Tesco Towers in the UK would make far more sense than doing so from California's southern coast.

Now, here's where the beauty of such a move lies for Phil Clarke and Tim Mason: It could be done without any damage to Mr. Mason's feelings or reputation. In fact, it could enhance both those two aspects personally for Tim Mason and Tesco.

The handoff: First, the move would allow Clarke and Mason to transition Fresh & Easy from its start up CEO - Tim Mason - to one who would now focus on "the next phase"of the fresh foods and grocery chain's development. Isn't that a good press release opening paragraph, by the way? This is done all the time in business when it comes to start ups, right? Core competency: Second, Mason could get back to his original position at Tesco - marketing. Before he left Tesco UK to start up Fresh & Easy in California he was the corporate director of marketing.

What follows then - the big question in this scenario should it play out - is: 'Who would replace Tim Mason, say in late 2011, as CEO (or whatever the title might be) of Fresh & Easy Neighborhood Market USA?'

I'm going to leave that question to be addressed in part two of what is going to be a series of columns on this topic, which is: 'Will incoming Tesco CEO Philip Clarke shake things up at Fresh & Easy when he becomes CEO in March 2011.' But Here's a hint: The central premise of my follow-up next column can be summed up in this question: 'If my scenario does become reality, would Phil Clarke name a new chief for Fresh & Easy Neighborhood Market from Tesco's ranks, or would he name a veteran U.S. food and grocery retailing executive to head up Tesco's fledgling U.S. operations?' But that's only a part of the next column. Stay tuned.

Recent columns by "The Insider."

~Thursday, May 20, 2010: Welcome to Discountopia USA

~Thursday, April 29, 2010: Heard on the Street: There's Something About Albertsons ... In Southern California

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.

Tesco plc, which owns Fresh & Easy Neighborhood Market USA, announced today that CEO Sir Terry Leahy (pictured above in a contemplative moment) will retire in March 2011. Leahy will be 55 years-old then, and will have served 14 years as CEO of the United Kingdom-based global retailer.

In making the announcement today, which was a surprise to even those of us who follow Tesco closely, Tesco plc chairman David Reid said: "Terry (Leahy) has made an unrivalled contribution over a prolonged period. He is undoubtedly one of the leading businessmen of his generation. He has put in place a strategy which can secure the progress of Tesco for years to come."

Philip Clarke (pictured above), 50, the head of Tesco's European and Asian retail operations, it's second-largest division after the UK, will replace Leahy as CEO when he retires next year. Clarke has worked at Tesco throughout his career, spending many years in retail and commercial (buying and merchandising). He joined the Tesco plc Board in 1998 and currently has responsibility for the group's growing international operations in Asia and Europe as well as for Tesco's information technology operations, the retailer said in its announcement today.

"I am honoured and delighted to succeed Terry who has taught me so much. I am very excited by the opportunity to lead such a fantastic team of executives, many of whom I've worked with for years. Together we will build a global business which focuses on the customer and fully respects our people, our communities, our supply chain and our shareholders," Clarke said today about becoming Tesco's new CEO in March of 2011.

Additionally, Tim Mason (pictured above), 52, the president and CEO of Fresh & Easy Neighborhood Market USA, will become deputy CEO of Tesco plc when Sir Terry retires in March 2011 and Clarke succeeds him, and given the additional responsibility for corporate branding and values and climate change initiatives, along with retaining his position as CEO of Fresh & Easy and remaining in the U.S. at the grocery chain's headquarters in El Segundo, California.

Prior to coming to America as CEO of Fresh & Easy Neighborhood Market in 2006 (the first Fresh & Easy stores opened in November 2007), Mason was Tesco plc's corporate director of marketing in the UK. As such, giving him the new overall corporate responsibilty for Tesco's branding makes sense in that experiential background regard. Terry Leahy was a director of marketing at Tesco prior to becoming its CEO, and was a mentor to Tim Mason when he started in the retailer's marketing department.

Tesco's corporate values and climate change areas have been central to CEO Leahy's tenure as CEO. For example, he's expended considerable effort in building a "Tesco" corporate culture since taking over as CEO 14 years ago, making it one of his chief leadership goals.

Additionally, Sir Terry has been in the forefront of grocery industry CEO's globally on the issue of climate change. For example, he's the first, and still only, food retailing industry CEO to have created an initiative in which many of the products on Tesco store shelves in the United Kingdom have "carbon footprint" shelf signs, which indicate an item's carbon footprint from field or factory to store shelf.

Leahy also has been an outspoken advocate in the UK and globally for creating corporate and government public policy responses to climate change. The fact he's intrusting this responsibilty to Tim Mason, who is the son-in-law of Leahy's mentor, former Tesco CEO Lord MacLaurin, suggests he sees Mason as his heir apparent at Tesco in these two areas - climate change and corporate culture. [Suggested reading: September 8, 2008: Tesco PLC CEO Terry Leahy: 'We Must Go Green' December 31, 2008: 'Green' Retailing: Tesco Scores Second Overall, Number One Among Food and Drug Chains, in Ceres Coalition's Climate Change Corporate Scorecard]

In the announcement today, Tesco CEO Leahy said about his March 2011 retirement: "When I became CEO I had a plan to build Tesco around its customers, to make it number one in the UK and to find new long term growth in non-food, in services and in international expansion. I wanted to develop a purpose and values that could sustain Tesco through its challenges and encourage and grow future leaders. It has taken 14 years but that strategy has become a firm reality now and so I feel my work is almost complete."

Commenting on the naming of Phil Clarke as his replacement, Sir Terry said: "I am delighted Phil Clarke has accepted the role of CEO from March 2011. I have worked with Phil at Tesco for many years and I am confident he has all the necessary talent, energy and experience to take the group forward. He will be supported by an outstanding team of senior executives who together represent one of the strongest leadership teams in the world of retailing. 'There is no better job than leading Tesco and after retirement I will concentrate mainly on private investment. I will, of course, keep a large shareholding in Tesco and remain its biggest supporter."

An interesting note: Terry Leahy and Philip Clarke both were raised in Liverpool, England, also home of those famous lads called the Beatles. Both CEo Leahy and CEO-apparent Clarke also worked at Tesco stores stocking shelves and the like while in high school.

Leahy said today he has no plans to be a non-executive member of Tesco's board when he retires in March 2011. He says his plans are to be an investor globally. We've heard from more than one good source today that Sir Terry has a big interest in investing and getting involved in companies in the rapidly-growing "green" energy, technology and related environmental industries. If so, this would allow him to focus the next phase of his business career to a large degree in the area of climate change, which as mentioned he's put a substantial focus on as CEO of Tesco. And at only 55 that second career phase could be a very long one.

Leahy is also a big supporter of the Everton Football Club and even a special advisor to the team. Perhaps he will have even more time to participate in what is one of his favorite activities - British football and the Everton lads- when he retires in March 2011?

Tesco also announced some additional executive changes that will take place in March 2011 when CEO Terry Leahy retires. Those changes are:

>David Potts, 53, will become the first CEO of Tesco's fast-growing Asia business. He is currently the corporate director of retail and logistics in the UK, as well as having responsibility for the Republic of Ireland. Clarke, who will become CEO in March 2011, currently heads up both the European and Asian operations.

>Richard Brasher, 49, currently Tesco's corporate commercial (buying and merchandising) director, will assume the newly-created role of CEO of the UK business and take responsibility for the Republic of Ireland, a position which will open up when David Potts assumes his new position in March 2011.

Additionally, Tesco said Andrew Higginson, 52, will continue as CEO of corporate retail services, which include the company's Tesco Bank, Tesco Telecoms division, its internet business and its loyalty marketing services firm Dunnhumby. Laurie McIlwee, 48, will continue as Tesco's finance director and Lucy Neville-Rolfe, 57, will continue as corporate and legal affairs director.

The company also said Trevor Masters will continue as CEO of its Central Europe and Turkey retail operations after the March 2011 changes, and in a new position Gordon Fryett will head up Tesco's property and real estate department across the group. A new group commercial (buying and merchandising) role will also be created, Tesco said, without being specific about the nature of the position.

Fresh & Easy Buzz will be offering some analysis of the retirement of Tesco CEO Terry Leahy, and the ramifications of it and all the changes announced today on Tesco plc and its Fresh & Easy Neighborhood Market USA chain, in the days and weeks to come. Stay tuned.

Biographical sketch of Philip Clarke, who will replace Terry Leahy as CEO of Tesco plc in March 2011. Source: Tesco plc:

Phil Clarke first worked for Tesco in 1974 as a part-time assistant while he was still at school in Liverpool.

Clarke then joined Tesco's management training scheme after reading Economics at Liverpool University.

He has broad Tesco experience as a store manager, a buyer, a marketeer and as an international executive.

Clarke joined Tesco plc's Board 12 years ago with responsibility for the Supply Chain; IT was added a year later. In January 2004 he took over responsibility for International Operations and retained IT.

He is now responsible for almost 2000 stores and nearly two-thirds of group space. He has been at the heart of all our new moves and operational improvements across Asia and Europe in recent years, including China, India and Turkey, building teams and developing talent in these important markets.

Clarke has been a Non-Executive Director of another FTSE company, Whitbread PLC, since November 2005 and is a member of the board of ECR Europe.

Philip Clarke is married with two children and lives in Hertfordshire, UK.