Sir Terry Leahy may be many things, but he isn’t known for being a ray of sunshine in the industry. So it was interesting to see him cutting a more bullish figure about recovery prospects this week than others like Sir Stuart Rose and Simon Wolfson have been.
That was despite a performance from Tesco that reflected a much more competitive grocery environment at home, and its presence in some of the toughest economies overseas. When you’re in Ireland, central Europe or the American West Coast, all you can do is shore up your position and weather the storm.
There have also been concerns that UK performance has slipped below the exceptional standards we’ve come to expect from Tesco. But while you had to look pretty hard to find the UK numbers in the interim results statement, there’s not too much to give investors sleepless nights.
Sure, Tesco’s competitors have been doing better, and it’s had to introduce initiatives like the discounter brands and double Clubcard points to bolster its position. But rivals like Sainsbury’s and Morrisons were never going stay weak forever, and Tesco’s market share has proved remarkably resilient given how far ahead of the pack it is.
Ironically, Tesco’s biggest challenge in the UK is a product of its biggest strength. Being the broadest of churches makes it harder to be all things to all men, and has made it easier for Asda to assert its credentials on price, and Sainsbury’s and Morrisons on product. The messaging to consumers needs to be invigorated; shoppers need to feel Tesco is on their side again.
While some have questioned if Tesco is at the peak of its game, it’s certainly weathering the global storm, and has shown real resilience to keep profits and sales growing. Leahy is the master at spotting what lies ahead, so let’s hope he’s spot on with those green shoots he’s seeing.
No room for son of Woolies
It’s hard to begrudge the valiant attempts of ex-Woolies men Andy Latham and Tony Page to revive some version of the chain. But their efforts will be in vain. The time to create a son of Woolies was nine months ago – not now, nearly a year after its demise.
The best sites have gone and interest in the brand is fading. Most of all, though, others that do it better have taken Woolies’ place in the market. As one commentator on our website perfectly put it, the real ‘son of Woolworths’ is Wilkinson.