Comment: John Allan can make a difference to Tesco

Tesco will hope incoming chairman John Allan can bring all his experience to bear in helping to steer a retail turnaround as he steps into the shoes left by Sir Richard Broadbent.

Allan has long been the favourite for the role. And despite a late run by one of retail’s favourite sons Archie Norman, whose grocery expertise made him a compelling option, he looks like a good choice.

Allan’s recent retail background is steeped in electricals following his stewardship of Dixons. His last foray into food was at Fine Fare, which ended 35 years ago. But Allan has a reputation for creating the right environment for his executive leadership team to execute long-term strategies, strong relationships with the City and the experience at Dixons of overseeing a customer-focused turnaround. In those attributes he has the make-up to be an effective critical friend to chief executive Dave Lewis as he continues to create his vision of a Tesco for a new age.

Despite continued reluctance to articulate that vision in public, it is a plan that is gathering pace. Lewis is still less than six months into the role, yet he has demonstrated the urgency to act that Tesco’s plight requires.

News of plans to axe up to 10,000 jobs at the retailer in one of the biggest rounds of redundancies in the sector’s recent history points to radical restructuring of the business. The plans have added to Lewis’s reputation as ‘Drastic Dave’, a name he earned at Unilever when he swung the axe in a similar way there.

The cuts, while painful for all involved, are no knee-jerk reaction designed to simply reduce costs.

As the scale of recent job losses across grocery demonstrates, food retailers are having to structurally realign themselves to a world of tightening margins and more humble growth ambitions.

In the case of Tesco that will mean a business focused on a simplified core operation with a reduced global footprint and a workforce that reflects that new reality.

In an exclusive poll for Retail Week by ICM, the scale of the challenge facing Lewis and Allan is brought to life. Despite the efforts to boost frontline services, almost 70% of consumers believe standards of service have not improved on levels seen in the past few years.

Moreover, one in four say that the recent supplier investigation into Tesco launched by the Grocery Code Adjudicator could negatively impact their likelihood to shop at the retailer.

Tesco, however, will take heart on ICM’s findings on price, which in reality will remain for some time the biggest influencer of consumer choice. Here Lewis’s influence can already be seen and a fifth of survey respondents believe prices are falling.

Recent Kantar data showing an improved sales trend, along with Allan’s appointment, are the latest building blocks to fall into place for Tesco as it continues the fight to reignite and streamline its cumbersome business.