Why new Tesco boss Philip Clarke got the top job

The author of the 'Tesco in a Box' strategy for international growth is well placed to succeed.

Last Updated: 06 Nov 2012

Can CEO-designate Philip Clarke fill Sir Terry Leahy's capacious shoes at Tesco? That's the big question, following the retailer's surprise announcement that its highly respected chief exec of 14 years is retiring next March. Tesco's got the first bit right – the succession looks to have been impeccably orchestrated, with no sign of the shenanigans that have afflicted M&S lately (at least, not yet). And if we assume that the real engine of growth for Tesco in the coming years will be its emerging markets overseas, then appointing Clarke – the man who first codified its strategy for expansion into new markets – makes a lot of sense…

Clarke is a Tesco lifer, who joined straight out of university in 1981 and worked variously as a store manager, buyer and marketer. He was appointed to the board in 1998, tasked with overseeing Tesco's supply chain; he got the IT remit a year later, and was placed in charge of international operations in 2004 – which means he's now in charge of about two-thirds of Tesco's retail space. In other words, there can't be many people who know more about how Tesco operates, or what does and what doesn't translate overseas.

In fact, perhaps one of Clarke's most important achievements as international director was to put together 'Tesco in a Box', a kind of strategic tool-kit for use when expanding into a new market. First used in 2004 in South Korea, it soon became the blueprint for every new country. Although Tesco is pretty coy about the details, as you'd expect, Clarke's inside the box thinking is partly about IT infrastructure (putting in place tried-and-tested systems), but also about shared values (how to treat customers and earn their loyalty) and standard processes (from loyalty card schemes to own-label brands).

Then again, Clarke is apparently very big on avoiding the cookie-cutter approach that has caused rivals Wal-Mart and Carrefour problems. Tesco often partners with local firms, so it can build local knowledge and make customers feel as if they're shopping in local stores – a strategy that has helped it to succeed where others have failed. As a result (and with the notable exception of the US, which hasn't quite gone to plan) Tesco has been expanding massively overseas, opening over 5m new sq ft this year alone. Clarke has to take much of the credit for this – but he'll need to keep repeating the trick if Tesco is going to maintain its remarkable growth.

Elsewhere on the retail executive merry-go-round today, it’s emerged that Waitrose commercial director Richard Hodgson (seen by many as Mark Price’s no.2) has quit to take a similar role under new Morrisons boss Dalton Philips. According to Price, he wanted to go back to his Yorkshire roots – a reminder that personal whims can disrupt the best-laid succession plans. Tesco will be hoping it suffers no such hiccups between now and next March…

In today's bulletin:
Cameron enjoys new broom effect - as Thiam and Hayward suffer
Lord Myners bites the hand that fed him
MT Leadership Visions: Mark Derry, Director of BBH Plc
Editor's blog: The real Sir Terry Leahy
Why new Tesco boss Philip Clarke got the top job

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