Former Walgreens Boots Alliance executive Ken Murphy takes the reins at Tesco today following Dave Lewis’ departure. Retail Week looks back to our profile of the Irishman, first published shortly after Murphy was named as the grocer’s new boss last October. 

Tesco boss Dave Lewis’ revelation that he would be stepping down from the supermarket giant after five years at the helm stunned the sector.

Adding to that sense of shock was the announcement that Ken Murphy, most recently chief commercial officer and president of global brands at Walgreens Boots Alliance, would take the reins as his replacement. And he has big shoes to fill. 

Murphy, Ken

Ken Murphy

The Tesco that Lewis is set to hand over to Murphy next year is a very different business to the one he was parachuted into five years ago.

He took over from Philip Clarke in September 2014 following a period of torrid trading and a string of profit warnings. Weeks into his tenure, the whistle was blown on an accounting scandal and by April 2015, the grocer posted its worst-ever pre-tax loss of £6.4bn. But Lewis sharpened Tesco’s proposition, reconnected with its customers and sold off non-core assets to put the business on a more stable footing.  

Last week, the retail giant declared that turnaround “complete”, reporting a 6.7% uplift in statutory pre-tax profit to £494m in the first six months of its financial year and delivering on the last of its six key turnaround goals, hitting its 3.5% to 4% group margin target.

It may be six months until he officially takes the helm, but questions are already being asked as to whether Boots lifer Murphy is the man to continue driving the UK’s largest grocer in the right direction, given his lack of background in food retailing. Some onlookers have even asked: “Ken who?”

So who is the man charged with the unenviable task of succeeding Lewis, and what will he bring to Tesco? 

Grocery gap?

Irish-born Murphy started his career in the 1990s with healthcare brand UniChem, prior to its merger with Stefano Pessina’s Alliance Santé. In 2003, he took on his first international posting at Alliance UniChem, as managing director of the pharmaceutical giant’s Italian arm, and worked closely with Pessina following its merger with Boots in 2006.

Murphy held the key role of deal manager and integration director for two years, overseeing all commercial aspects of the merger and spearheading the integration of the two businesses, reporting directly to Pessina. 

He returned to the UK as Boots’ commercial director in 2009 and was promoted to chief operating officer two years later. He went on to take senior roles within the wider Walgreens Boots Alliance, based in the US, first as managing director of health and beauty brands, then as chief commercial officer and president of global brands, prior to his departure earlier this year. He has continued to work closely with the group on a consultancy basis. 

Despite his impressive CV, Murphy’s apparent lack of grocery experience has been levelled at him as a potential shortcoming as he prepares to join Britain’s biggest food retailer.

“If you look at the CEO as being the best shopkeeper in the team, it’s the wrong brief. What Ken needs to have – and I do know him, and I do believe he has this – is a strategic perspective”

Dave Lewis, Tesco

But to hold that against him is to overlook a key fact – the scale of Walgreens’ food business. In a highly fragmented US grocery market, Walgreens raked in $3.4bn (£2.8bn) in food sales in 2018, making it roughly the same size as Tesco’s online grocery business in the UK. 

In the face of fierce competition from chief pharmacy rival CVS, and the likes of Walmart and Amazon in food, Walgreens suffered its worst quarter since acquiring Boots in 2014 during the three months to November 30, 2018.

In response, it has looked to revamp its grocery proposition to drive footfall, partnering with US grocery giant Kroger and investing in its own-brand food offer. Since the end of last year, Walgreens has been trialling Kroger-branded ‘Kroger Express’ concessions in stores across the US. 

GlobalData managing director Neil Saunders describes the Kroger deal as a “very important” strategic partnership for Walgreens – and says it is one that Murphy would have been heavily involved in. 

With that in mind, Lewis himself has no concerns about Murphy’s background when it comes to food.

“If you look at the CEO as being the best shopkeeper in the team, it’s the wrong brief,” he says. “What Ken needs to have – and I do know him, and I do believe he has this – is a strategic perspective.

“So, I don’t think it’s an issue at all. He’s got loads of retail experience, he’s got loads of wholesale experience, he understands brands, he understands customers, he’s super-smart and he’s a really nice bloke.”

Strategic skillset

Others close to Murphy echo those sentiments. One former colleague says: “He’s a really good guy and great to work with. He will bring a strong product and people focus, plus lots of relevant experience in wholesale, brands and international.”

A recruitment source adds: “At WBA he’s very highly thought of by the chief executive. He’s a very bright guy, a highly intelligent guy. Boots changed a lot in his time there and he’s been at the forefront of all of that. He’s going to add something above and beyond what any internal candidate might have offered.”

Those internal Tesco candidates were aplenty. Although Charles Wilson, the boss of Tesco’s Booker wholesale business, asked not to be considered for the role having only recovered from cancer last year, the grocer’s UK boss Jason Tarry and chief operations officer Tony Hoggett both represented strong options.

But chair John Allan and his board ultimately opted to shop outside of Welwyn Garden City for a chief executive by recruiting Murphy.

Although he will bring a degree of new ideas and fresh thinking to the business, he is expected to press ahead with the strategy Lewis has put in place. 

Last week, Tesco unveiled two new strategic investments as the grocer looks to tap into what Lewis calls “untapped value opportunities”. 

It has taken an undisclosed stake in tech business Trigo, which helped create Tesco’s first cashless store in Welwyn Garden City, and snapped up wholesale business Best Food Logistics for a “nominal” sum. 

The grocer revealed further plans to open at least 25 “urban fulfilment centres” over the next three years, which would allow it to double its online grocery capacity, and accelerate openings in its Express c-store format.

It will also launch Clubcard Plus late this year, a subscription-type addition to its loyalty scheme, to bring other divisions of its business – including the bank and Tesco Mobile – closer together. 

Amongst that, Murphy will need to draw on his international nous to help turn around Tesco’s struggling Polish division, which has been hampered by changes to Sunday trading laws and large hypermarkets that have become out of kilter with shopping habits in that market.

With plenty on his plate, Murphy will be afforded little by way of a honeymoon period in a fiercely competitive grocery market. 

Succeeding Lewis – who earned the moniker “the man who saved Tesco” – will not be an easy task. But Murphy has the credentials to create a Tesco legacy of his own.