In the era of multi-format, omnichannel retail, could a chief executive with a non-retail background be exactly what Tesco needs?

When underperforming chief executives of retail companies are replaced, their departure often prompts the cry: “He/she is not a retailer.”

That is clearly not an appropriate call for that passionate retailer, man-and-boy, Philip Clarke, as he quits the helm of Tesco. But how will his non-retailer successor fare?

Succession planning, Tesco’s strongest hand for almost four decades, has become its Achilles’ heel. The unassailable fortress that was being built in the MacLaurin-Leahy era (1973-2011), while competitors played musical chairs with their chief executives, has come tumbling down.

The argument for new blood and a new broom at Tesco cannot be gainsaid. But the choice of an FMCG recruit for the top job has raised questions. The performance at Carrefour of Lars Olofsson from Nestlé was nothing short of a disaster; that of his successor, the veteran retailer Georges Plassat, has the makings of a triumph.

The track record of successful, mass-market retailers and senior branded goods executives switching posts is not unblemished, in either direction. Look what happened to John Browett when he went to Apple after star turns at Tesco and Dixons, and similarly when the esteemed Ron Johnson moved from Apple to JC Penney.

It’s not that FMCG-ers can’t make good retailers, as the 1990s turnaround story at Asda goes to prove. Having recruited Allan Leighton from Mars as his marketing director, Archie Norman brought in a succession of other high fliers from Mars – for example Richard Baker and Justin King no less, and not forgetting Tony DeNunzio from Unilever and Pepsico. None came in as chief executive but all later assumed that role (there or elsewhere) to great acclaim.

And it’s not just men who are from Mars. Angela Spindler and Catriona Marshall also came into Asda via that route and they are now two of the most prominent female chief executives in the sector.

So what should Dave Lewis do to avoid that fateful valediction “he’s not a retailer”?

First and foremost, he must recruit for success today above planning for succession tomorrow. Was Archie Norman a retailer when he came to Asda? Not really, being a former partner at McKinsey and latterly finance director at Kingfisher. But he built a team around him and turned them all, himself included, into a veritable retail powerhouse.

Retailers today require an ever-broader and more sophisticated set of skills than they did in the 1990s. They must be multi-format, omnichannel, international purveyors of wide-ranging goods and specialist services, to a highly informed, unforgiving clientele whose desire for instant gratification is only matched by a passion for the lowest price.

FMCG-ers know a thing or two about brands. And with their huge research and development budgets they know a thing or three about consumers. But while the consumer goods sector narrows its focus (much of the merger and acquisition boom – +40% over 2013 – has been driven by single-category consolidation), the business of retailing shines an ever broader beam. The right team is an absolute prerequisite for new chief executives to see the light.

  • Michael Poynor, senior advisor, Financo