The successor to embattled Tesco finance chief Laurie McIlwee, who is widely expected to resign next week, will have to steel the troops for “precision bombing rather than boots on the ground” in the grocery price war, an industry watcher has warned.
McIlwee is set to leave after rumours of a clash with chief executive Philip Clarke over strategy, and investor unrest.
Bernstein Research analyst and former Tesco executive Bruno Monteyne said today that Tesco and Morrisons have begun “targeting a narrow set of ultra high-volume own-label products” to fight off discounters Aldi and Lidl, which have been ferociously stealing share from larger rivals over the last year.
Monteyne argued that shoppers had realised they did not “need to buy from the bottom shelf any more to get a good price” as Aldi and Lidl offered cheap prices for products of higher quality than Tesco, Morrisons and Asda’s value ranges.
Tesco’s share price is at its lowest in a decade, and McIlwee’s departure will come as a blow ahead of anticipated disappointing annual results on April 16.
McIlwee joined Tesco in 2000 and became finance chief in 2009. It is understood there has been unrest amongst analysts and investors over his communication over falling profits in central Europe and the decision to scrap a key profit margin target.
Exane analyst John Kershaw backed Tesco to return to growth amid price investment from rivals, saying he thinks the grocer’s “scale, targeted price cuts, new Extra format roll-out and multi-channel offering will get it back to leading.”
Tesco declined to comment.