Tesco’s head of UK & Ireland, Richard Brasher, has stepped down unexpectedly today leaving the role to be absorbed by Group CEO Philip Clarke. Following the underperformance of the ‘Big Price Drop’ initiative, spearheaded by Brasher, the UK market is proving problematic for Tesco. Clarke’s step closer to the UK business demonstrates his intention to turn the business around.
Having created the role of chief executive of UK & Ireland in the wake of Terry Leahy’s departure, Clarke is now seeking much closer involvement in the UK arm of the business, taking that responsibility back into his own hands. The role of UK & Ireland chief executive may have proven to overlap too much with the responsibilities of the group CEO. Clarke’s hands on approach may show strong leadership but will require a huge contribution from the UK senior management team to prevent further decline.
According to Cliona Lynch, senior analyst at Verdict Tesco’s UK business is facing its most difficult period in its history. “A difficult Christmas showed that the investment in the ‘Big Price Drop’ was not reaping sufficient rewards. As the UK’s number one grocer, Tesco, with 28.3% share in 2011, has the most to lose to competitors. Verdict estimates Tesco’s space in the UK is to reach 37.7m sq ft in 2012, with coverage in every postcode in the UK. This strong coverage is not being supported by growing sales, with the result that sales densities have been falling since 2009, and we expect them to fall by a further 2.9% in 2012.”
In this climate it is right for the group CEO to step up to the responsibility of turning the core UK business around. However, the role will be challenging for Clarke. International management will need to assume greater responsibility for the continuing issues with the US Fresh & Easy business and difficult trading climates in many of Tesco’s global markets to alleviate pressure on Clarke. Brasher’s experience of more than 25 years with the retailer will be missed but Clarke’s leadership shows commitment to leading Tesco out of this difficult time.