Retrench then rebuild. It seems Tesco is doing the turn-around two-step

Commenting on the future of Tesco, Professor Andre Spicer of Cass Business School said:

“It seems Tesco is doing the turn-around two-step: retrench then rebuild. It seems to have pulled off the first part fairly well today. By divesting non-core businesses and cutting costs it has seen a jump in share-price. But it remains to be seen whether the retailer can rebuild itself. Short term measures such as cutting prices might help. But the longer term question is how can Tesco use the things it is really good at, which are unique to the company, to compete in a changed retail landscape.

“In its efforts to restructure, Tesco can learn from the evidence: firms trying to turn themselves around often follow similar strategies. The big difference between these which succeed and those which fail is how well those strategies are actually implemented. Firms which succeed in turning themselves around tend to have a clear and consistent growth strategy which they stick to. Firms which fail tend to flounder around fire-fighting. This means Dave Lewis is going to need to articulate a clear and compelling way in which Tesco can build a future for itself beyond retrenchment.

“Implementing changes at Tesco is going to be challenging. There are many transformations underway at once – they have seen big changes in leadership, they are trying to change the culture, they have cut employee benefits, they have changed operational procedures. On top of all this, they are moving the corporate headquarters. Dave Lewis has the advantage of having a crisis to help drive changes. But so many transformations at once are likely to create significant uncertainty on the part of staff and could create significant risks if not handled correctly.

“Tesco faces a huge challenge to its self-image. No longer is it a giant that dominates nearly every sector. The great existential questions for the retailer will be; who might Tesco be in the future.”