Q&A: Philip Clarke, Tesco

Where does Tesco stand now?

PC: I want to tackle the misconception that Tesco is struggling. We are not.

We are successful and we are strong and my part in that is to set us on a course for sustained growth well into the future.

Sales in businesses outside the UK were strong. Profits were £1.1bn – that’s more than any of our listed UK competitors make. When you talk about inheritances, what an inheritance that is. We have the best located stores in the UK.

What strategy changes have you made?

Part of the course-setting is recognising when something isn’t working in the way that it should, it’s putting the long-term growth at risk. Dealing with it, and dealing with it quickly and incisively. We’ve made some big decisions this year.

The business is far from broken but it was not as good as it could be.

As an industry we have been running up the down escalator for a little while, too much new space, too many too big stores, customers moving online and back to the high street.

I was impatient to get it done quickly. I decided to do three years work in one [in terms of increasing service].

We will deliver the kind of shopping trip our customers desire and that our customers expect and that our staff want to provide. We are making stores less clinical and a better place to shop.

Different stores service different customers from Amersham to Accrington and we will deliver a more personalised and more localised offer.

Are you confident you will not pull out of the US?

I feel that we will look back on this as a turning point for us and for Fresh & Easy.

We can accelerate, we do not need to spend hundreds of millions [in the US], I need to demonstrate to shareholders that who have been very patient and I think we will get over the line.

Is a £1bn investment in the UK enough?

We think [£1bn] is enough money. We spent about nine months working out the plan. The first thing is to create better stores.

Do people still love Tesco?

We have millions of customers who shop with us and they do so for a reason. They do so because we provide that value for money. They have Clubcard which they do love.

There are lots of customers who continue to shop at Tesco and really, really love it.

Do you have too many large stores?

LM: Because we were into this game first we have some of the prime locations that will allows some of the best locations in the world which will always be the centre of people’s shopping journey. They will be strong channels going forward.

We were guilty in the past of investing and hoping things would come through. We are know choosing locations where we know we are coming through and balancing them with smaller stores, probably more food, more clothing, probably less electrical and less entertainment but a massive focus on the internet.

How did you allow your stores to become too cold and clinical?

I do not really buy into that we have become too cold and too clinical and have lost the emotional connection.  

We have reduced the operating margin of the UK. We are going to take less profit out of every store. We are putting more into price, more in organisation.

How will your promotional mix look?

Getting the promotional mix right is a good thing. Price Drop was a great idea. It got off to a good start but wasn’t sustained, we have got a lot planned with it.

I do not really like the blanket £5 off £40, it was done to us at Christmas and it’s something we felt we had to do. It was something to switch customers quickly and I think we should be more discreet about it in future.

Where do you plan to venture next?

We do not have any plans at the moment to go into any new market in the world.

Does your management structure put too much onus on you following Richard Brasher’s departure?

The interesting thing about the leadership team in the UK now is that they’ve all ran at least one international assignment. It’s inevitable there are changes when there’s a change at the top and we have younger people coming through being given the chance to shine. I’m doing that job until I stop doing it.