Tesco boss Philip Clarke is likely to face a rough ride at its AGM on Friday (June 28th) as he addresses the retailer’s increasingly impatient base of shareholders at the AGM.

Tesco boss Philip Clarke is likely to face a rough ride at its AGM on Friday (June 28th) as he addresses the retailer’s increasingly impatient base of shareholders at the AGM.

“The challenge is articulating what will re-establish the loyalty Tesco enjoyed in its heyday”

Chris Brook-Carter, Editor-in-chief

The meeting comes only weeks after the grocer reported a 3.7% slump in its first-quarter like-for-likes, a performance one broker labelled its worst in a decade. And, it comes only days after ratings agency Fitch cut its credit rating on the supermarket, citing the escalating price war that is ripping through the domestic market and “economic and political headwinds” abroad.

Both events have piled pressure on the already embattled Clarke, who is likely to defend Tesco’s long-term strategy while citing the unprecedented adverse trading conditions affecting all the largest grocers.

Critics in particular are rallying around a perceived lack of action in response to the threat posed by the discounters Aldi and Lidl, claiming Tesco has not moved hard or fast enough on cutting prices.

The senior team at Tesco will argue that while they understand what needs to be done to remain competitive – and while they believe in a more targeted approach to price cuts, they also believe price alone will not deliver long-term loyalty – they will not be forced into drastic action to drive short-term top-line benefits.

The challenge though is articulating exactly what will re-establish the loyalty Tesco enjoyed in its heyday.

It has been more than two years since Clarke unveiled a six-point plan to return the leading retailer to former glories, but recent Kantar Worldpanel data still points to a deteriorating performance at home.

Clarke can rightly point to progress against the plan, particularly in his vision of creating a leading multichannel business. But for all the operational improvements, there are few signs this direction has thus far chimed with customers or created a defined position in the market for the Tesco brand.

Clarke has been unfairly criticised for refusing to acknowledge the scale of Tesco’s problems. On the contrary, he defined it perfectly from the outset, stating two years ago that customers had fallen out of love with the grocer.

The problem, despite the progress made, is that there are few signs that romance will return any time soon. And until Tesco can reconnect with customers emotionally, the results the City craves will remain beyond it.

  • Chris Brook-Carter, Editor-in-chief