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New Tesco boss Philip Clarke fires a warning shot at his UK agencies

UK supermarket giant Tesco has turned in another record set of figures for the year to February 26 2011 but disappointed the markets (and new CEO Philip Clarke) with a 0.7 per cent fall in UK sales over the past three months.

70 per cent of its profits growth came from its operations in continental Europe and Asia although these still only account for two thirds of its overall profit of £3.54bn on sales of £67.6bn.

But Clarke (formerly international director until taking over last year from Sir Terry Leahy) will have sent a shiver down the spines of his UK agencies, chiefly lead ad agency The Red Brick Road, with his observation that: “We didn’t achieve our planned growth in the year and this was only partly attributable to the deterioration in the consumer environment during the second half.

“We can do better and we are taking action in key areas. For example, to drive a faster rate of product innovation and to improve the sharpness of our communication to customers.”

The latter remark surely denotes (at best) a wigging for the marketing team and agencies. TRBR has handled Tesco since Sir Frank Lowe and a group of senior colleagues quit Lowe & Partners with the huge Tesco account in 2006.

Sir Frank and Sir Terry Leahy had proved a formidable and durable team on Tesco (Leahy moved the account to the then Lowe Howard-Spink when he was marketing director) but since then Lowe has preceded Leahy into retirement.

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TRBR also recently lost Tesco account director Karen Buchanan to Publicis London which she joined as CEO. Publicis is still trying to replace the Asda account it lost in 2007.

But Publicis won’t be the only agency trying to see what exactly Clarke is driving at and what he is doing about it. WPP’s Sir Martin Sorrell has been covetously eyeing the Tesco business for years even to the extent of being a potential backer of TRBR when Sir Frank was setting it up.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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