Ken Murphy has big shoes to fill – but is Tesco’s new growth strategy up to scratch?

In fitting with his Midas touch track record as boss, Dave Lewis may just have picked the perfect time to quit Tesco.

Thanks to a succession plan that will last until at least April next year, he has at least ensured the initiation for his successor Ken Murphy will not be anywhere near as traumatic – or dare we say drastic – as those dark days in September 2014, when he took over at the helm of a supertanker in serious danger of ending up on the rocks.

As Lewis and his UK CEO Jason Tarry admitted to The Grocer today, back then the only strategy for Tesco was “survival”.

Five years on, Lewis’ reputation as the man who saved Tesco seems secure, at least for the short to medium term. It makes perfect sense he should bow out now, on a high, when the aims of his turnaround plan have been achieved – six months early at that.

Today he pledged to spend those six months working hard “at the wheel” on a new growth strategy that the former Walgreens Boots Alliance boss will inherit. Lewis, whose lack of retail experience was flagged up as a possible Achilles heel when he took over, was quick to dismiss fears about his successor’s lack of track record in the food industry.

Admitting he had been in on the interview process, Lewis said his advice to Murphy in his first months was to “use his ears more than his mouth” and above all to ensure he “puts the customer first”.

Yet it’s not just the fact that Murphy has big boots to fill that poses questions about whether he can achieve the same magic as Lewis.

Dave Lewis departs: his milestones as Tesco CEO

With the storm clouds of Brexit darkening the skies above the retail world, with Chancellor Sajid Javid promising at this week’s Conservative Party Conference, to raise the minimum wage to £10.50 (higher even than the Labour Party under its Marxist leader Jeremy Corbyn), and with the discounters still growing, the impression is once again Lewis is on the money with his decision making.

In contrast, Murphy will inherit a plan which, through the very different circumstances in which he takes charge, is nowhere near as simple and well-defined as that relentlessly pursued by Lewis in his turnaround.

Once Lewis had cleared out the skeletons in Tesco’s closet in 2014, he set about driving a crystal-clear strategy based on old-fashioned retail values: a ruthless product reset, improved availability, more competitive prices and better service. He’s also not only reestablished Tesco’s purpose (‘Every Little Helps’), but built on it, embracing and recalibrating Tesco’s CSR programme through leadership of the UN 12.3 sustainability goals. And at the same time, he’s turned around Tesco’s B2B reputation: from a nasty bullying business, his reset of Tesco’s supplier relations has regained the trust and admiration of many suppliers. 

Today, the new strategy is based on arguably more exciting but much less well-trodden avenues for growth, despite Lewis’ insistence that Tesco has a “really clear growth strategy”.

Had it not been for Lewis’ big announcement, there would no doubt be much more attention given to some key elements of those ideas.

Among them are plans to convert excess warehouse and retail space in at least 25 stores to a network of machine-picking urban fulfilment centres, which Lewis claims could double the parentage of sales coming from online to 16% of Tesco’s sales. Quite some ambition.

Lewis also announced plans for 150 new convenience stores, as well as what is potentially a key move by Tesco to revive its Clubcard, making it fit for the digital age.

By Christmas, Tesco will launch a service charging customers £7.99 a month, entitling subscribers to up to £40 a month off two big shops and 10% every time they shop from a yet-to-be-announced list of own-label Tesco products.

But as intriguing as they are, such plans do not add up to a strategy that guarantees success for the new man at the helm.

That will have to wait until Lewis waltzes off into the sunset for a well-earned break, and Murphy begins the unenviable job of coming up with a mantra that can help him follow in those large footsteps.