Following Tesco’s accounting scandal chief executive Dave Lewis must not lose sight of the struggling retailer’s long-term strategy.
It goes a long way towards demonstrating quite how embattled Tesco has become that the most recent Kantar data showing the grocer’s sales fell by 1.5% in the four weeks to October 12 has been seized upon as a victory.
“Whilst one swallow does not make a summer, we can take some small comfort that our efforts are having an impact,” said Tesco boss Dave Lewis in an internal memo to staff last week. “Our performance in food has been one of our strongest for a very long time.”
The accounting scandal that has rocked the grocer during the first month of Lewis’s tenure has been a huge and unpleasant distraction to the already Herculean task of leading a turnaround of the country’s biggest retailer. And the study by law firm Lazarus, widely reported this week, suggesting that Tesco has the lowest customer satisfaction metrics across the grocery industry only illustrates the scale of the challenge further.
But throughout the crisis, Lewis’s rhetoric has demonstrated he understands the need to move Tesco on from its current malaise at pace.
The decisive response over the last month has at least delivered a comparative level of certainty for the business. And, at the time of writing, Tesco was confident that the chief executive and his new finance boss Alan Stewart would this week be in a position to give the market a clear indication of its income for the first half.
This should allow the Tesco machine the space to move on.
Lewis must work with one eye focused on the long-term structural changes that Tesco must undertake.
Analysts at HSBC said this week that “significant re-engineering of the business” could cost £3bn, and Tesco should invest in prices, food quality and increasing store staff by up to 25%.
But Lewis is also only weeks away from the critical Christmas trading period, which will require him to fight a short-term, tactical battle to stem Tesco’s decline further.
While Lewis won’t make any big strategic announcements this week – we expect them in 2015 – he will already be forming his first impression and a return to a focus on the core. Service, availability and price are already front of agenda and will remain so in the run-up to Christmas.
Last week alone, as part of its Feet on the Floor programme, more than 2,000 Tesco staff went into more than 600 stores to help out and reconnect the head office with the customer base.
As the rise of Aldi and Lidl have shown, British shoppers will reappraise their choices if the offer is right. And whether it’s sending office staff into stores to help improve service or seizing on small victories such as the Kantar sales numbers, in this case every little does help.
- Chris Brook-Carter, Editor-in-chief