Chief executive officer, Tesco
Nationality: British.
Born: February 28, 1956, in Liverpool, England.
Education: University of Manchester Institute of Science and Technology, BS.
Family: Married Alison (maiden name unknown); children: three.
Career: Tesco, 1979–1984, trainee, marketing executive; 1984–1992, marketing director; 1992–1995, board-level marketing director; 1995–1997, deputy managing director; 1997–, chief executive officer.
Awards: Grocer Cup for Outstanding Achievement, IGD Food Industry, 1999; Most Admired Leader, Management Today, 2003; International Retailer of the Year, MMR, 2003.
Address: Tesco, Tesco House, PO Box 18, Cheshunt, Hertfordshire, EN8 9SL, England; http://www.tesco.com.
Sir Terence Patrick (Terry) Leahy became highly regarded in retail for successfully leading the transformation of Tesco from an ordinary supermarket chain into a diversified retail brand that appealed to British middle-class concerns for product selection, price, quality, and convenience. Leahy's focus on the customer helped Tesco become the top grocer in the United Kingdom in 1996 and one of the largest retailers worldwide in 2001. Considered brilliant, studious, and youthful, Leahy was also considered somewhat dull, as he preferred to talk about Tesco with associates and acquaintances rather than other topics.
Liverpool Influences
Leahy's Liverpool roots factored greatly into his ability to market groceries and household goods to the common British shopper. His father was a carpenter and greyhound trainer, and the Leahys lived in prefabricated housing in the Scouse area of Liverpool, an area known to foster good communicators. A down-to-earth upbringing, along with disciplined study at St. Edwards College and an honors education at the University of Manchester Institute of Science and Technology, contributed to Leahy's success in business, which led to his becoming chief executive officer of Tesco. Reserved about his personal life, he dismissed the idea of his being a rags-to-riches story. He was not ambitious; he simply did the work others asked him to do. However, Leahy acknowledged that his background had been integral to his success, saying, "I've been for tunate enough to see all layers of British life. I feel I know personally all of our customer groups" (Economist, U.S. edition, August 11, 2001). While Leahy brought a detail-oriented, analytical approach to his work, he relied less on raw data and more on conversations with staff and customers to determine the path of Tesco's growth.
Marketing Career At Tesco
Aside from employment at Tesco as a shelf-stacker while a teenager, Leahy began his career with the company as a marketing trainee in 1979, when Tesco was in the process of upgrading its image, revamping the store atmosphere, and expanding its product offerings in new superstores. Leahy became a marketing director in 1984, as Tesco established a stronger brand position in the United Kingdom's grocery market, and handled marketing of fresh foods in 1986. Tesco formed a board-level position in marketing in 1992 and promoted Leahy to that position.
Under Leahy's leadership Tesco adopted two new store formats during the early 1990s, Tesco Metro and Tesco Express. The Metro small-store concept, with locations on busy streets and in urban neighborhoods, emphasized fresh and prepared foods in about 10-thousand square feet of retail space. Tesco Express provided gasoline and convenience.
In leading Tesco's marketing strategy, Leahy emphasized serving the company's customers. In 1992 Tesco initiated the "one-in-front" program, in which a new checkout line opened when another line had more than two customers waiting. Labor costs increased significantly, but the service pleased customers. Tesco launched its "value" brand of products to accommodate customer price concerns. The "Would I buy it?" program was designed to ensure product quality.
Leahy received much of the credit for the success of Tesco's loyalty-card program for frequent customers, launched in 1995 and a first in grocery retailing. Clubcard members accumulated points that could be applied to future purchases through vouchers; Tesco sent members quarterly statements along with the vouchers. The program expanded to allow members to accumulate points through more than five thousand venues in the United Kingdom, as well as to transfer vouchers for travel through Airmiles Travel Company. Tesco counted more than 10 million Clubcard members by 2001.
Expanding Tesco's Breadth and Depth
Leahy became deputy managing director of Tesco in 1995, in preparation for promotion to the position of chief executive officer in 1997, after which he made his greatest impact on Tesco. He made striking changes in the company through his "four pillars" of expansion: to build on the strengths of the home market, to sell nonfood items, to offer banking and financial services, and to expand internationally. These key points impacted each other synergistically.
In building on the home market, Leahy sharpened and diversified the Tesco brand. In 1997 Tesco introduced a new store format with the opening of its first hypermarket, Tesco Extra, an 87,000-square-foot store that offered customers a wide selection of goods, including nonfood items such as health and beauty products. Tesco sold big-screen televisions, computers, and other choice goods that could be offered at competitive prices by leveraging Tesco's volume-purchase capacity. Clothing, under the Tesco, Florence and Fred, and Cherokee (licensed from Target Corporation) brands, sold exceedingly well. Tesco introduced two new grocery brands, Finest and Tesco, but maintained a strong inventory of popular national brand products. Between 1997 and 2003 Tesco opened 80 Extra hypermarkets throughout the United Kingdom.
Building the home market involved expansion of and improvements to Tesco's three existing store formats. Tesco remodeled four hundred stores and opened several conventional supermarkets, Metro stores, and Express stores. In 2003 Tesco acquired the T&S chain of 910 convenience stores and converted 138 units to the Tesco Express brand; the company planned ultimately to convert more than 400 units. Overall, Leahy expanded the Tesco chain of food stores from 568 units in 1997 to 1,878 units in 2004.
Tesco introduced new financial services in 1997, with the introduction of Tesco bank accounts and a Tesco Visa credit card through a joint venture with the Royal Bank of Scotland. Tesco offered the option of making check deposits at the grocery checkout. Tesco's banking services raised questions about their impact on banks, particularly as they became available geographically along with Tesco's store expansion. Offering more than 15 products and services, Tesco Personal Finance carried more than four-million customer accounts by the end of 2003.
Tesco introduced catalog and online shopping during the late 1990s, including Tesco Direct and Tesco Direct Baby, introduced in 1997. Supported by Tesco's excellent supply-chain systems, tesco.com offered online grocery shopping that allowed customers to choose merchandise from specific stores, rather than a general catalog. One of the few profitable online groceries, tesco.com became the largest in the world, with service in Ireland and South Korea. After a successful 2001 market test in San Francisco in partnership with Safeway, Tesco expanded the service to other U.S. markets.
Tesco's international operations, initiated in 1993, expanded after Leahy became chief executive. To supermarket chains in Poland, Hungary, the Czech Republic, Slovakia, and France, Leahy added the HIT chain of 13 hypermarkets in Poland and new stores in Thailand, Taiwan, Malaysia, and South Korea. In 2003 Tesco acquired the C Two-Network chain of 78 small grocers in Tokyo, and a five-store chain in Turkey. After selling operations in France, in 2004 Tesco operated more than 440 stores in Europe and Asia, for a total of more than 2,300 stores worldwide. Under Leahy, Tesco's sales more than doubled between 1997 and 2004 to £33.5 million (more than $60 million).
Sources for Further Information "Leahy's Lead; Tesco," Economist, U.S. edition, August 11, 2001.
"MMR Honors Tesco CEO Leahy," MMR, January 12, 2004, p. 1.
"The MT Interview: Sir Terry Leahy," Management Today, February 5, 2004, p. 34.
—Mary Tradii
