Leadership Transition at Tesco – The Challenges in Store for Dave Lewis



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Introduction

On July 21, 2014, the management of Tesco Plc. (Tesco), the largest retailer in the UK, suddenly announced that it was replacing its CEO, Philip Clarke (Clarke), with Dave Lewis (Lewis), head of personal care at Anglo-Dutch FMCG conglomerate, Unilever plc (Unilever). Lewis would be the first outsider to head Tesco. For Clarke, who had succeeded Terry Leahy (Leahy) in 2011, the news was definitely not unexpected, given the decreasing sales figures. However, it put paid to what would have been his 40th anniversary celebrations at Tesco.

Leahy’s 14-year tenure at Tesco had changed the way business was done at the company. Tesco had become the world’s third largest retailer with 400,000 employees, nearly 5000 outlets worldwide, and a £63 billion turnover in the year 2010. The sudden announcement of Leahy’s retirement in 2011 came as a shock to both employees and industry experts. According to Leahy, he had done his job at Tesco and had made a significant improvement from the time he had been appointed CEO and he felt it was the right time to leave.

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Critics questioned the timing of the retirement as the company was going through a tough time through the recession period after the 2008 financial crisis and the losses the company had incurred at its US venture, Fresh and Easy Stores. Philip Clarke was appointed the next CEO. Clarke had been looking after the international business since 2004 and had played a pivotal role in the success of the company in countries like China and South Korea, where Tesco had made huge profits. As Clarke had spent more than three decades in Tesco, analysts and industry experts gave him the thumbs up and expected him to carry forward Leahy’s legacy......

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