Jon Copestake, Retail Analyst at The Economist Intelligence Unit, argues that Clarke’s inability to implement a “big” strategy let to the mounting of small problems for the company
“There is little doubt that, after yet another profit warning in the challenging UK market, shareholders will not be too sad to see the departure of Philip Clarke. However, it must be remembered that many of the structural challenges inherited by Clarke such as lossmaking operations in foreign markets and the overexposure of big box expansion in the UK were inherited from the tenure of his immensely successful predecessor Terry Leahy. Clarke has also struggled against a rapidly changing UK retail market thanks to consumer bearishness and competition from discount, convenience and online channels.
Strategically many of the decisions taken under Clarke may be commendable as long term goals. The firm has left loss-making markets like Japan and the USA, built dark stores to support online growth, developed an affordable tablet to tie in with its Blink Box acquisition and bought up cafe and restaurant chains to augment future experience-based shopping. However, there has also been a piecemeal and scattershot approach to Tesco’s strategy, where the pursuit of so many smaller scale long term ideas has come at the expense of setting any “big” strategy as short term problems have continued to mount.
To sum up Tesco has struggled primarily on price competition from discounters and online sellers – something which strategies such as a £1bn store facelift were never going to fix.”
Professor of Practice, Chris Beer, Warwick Business School argues that it was difficult for Clarke to dramatically change a company he had been part of for so long
“The news of Philip Clarke’s demise at Tesco if not completely unexpected is nevertheless a sad end to an uncomfortable reign.
“It has been an unprecedentedly difficult period for the retailer but how much were the seeds of the failure of Clarke’s time in charge already sown when he assumed control?
“The situation looks uncomfortably like that at Manchester United where the expectations of a team already past its best were nevertheless just as high as ever. The pressure to deliver immediate success did not allow David Moyes the time to develop a plan to refresh and redirect the team in his own image.
“Time clearly ran out for Clarke as well. There have been many initiatives and no shortage of investment but nothing has yet reaped the rewards necessary to keep Clarke in his job.
“The difference is that Clarke was an internal successor and an important part of the previous management team. It must be difficult to drive radical change – which seems to have been needed – when you have been part of the team that has created the current strategy.
“Too little, too late has been the criticism, but was this a case of a lack of recognition of the scale of the problems or a natural desire for evolution when revolution was required? Either way, with the rise of the discounters compounding the problem, the powers that be have clearly lost patience.”