Is Tesco the right source of leadership for John Lewis?

The John Lewis Partnership announced the long-awaited decision on who will replace Dame Sharon White as its seventh chairman. Jason Tarry is an interesting choice for the role.

The choice emphasises two things:

1. the importance of Waitrose for the entire Partnership and

2. highlights the direction the Partnership is taking. 

Waitrose was once the small brother of the Partnership. Decades ago, there was even speculation about whether the grocery arm should be sold off. Currently, Waitrose generates 60% of revenues and profits for the Partnership. That was the main driver for selecting the Chief Commercial Officer of Tesco as the new chairman.

Tesco, as the company from where the new chairman is selected, indicates that strategically, the Partnership wants to focus on high-volume middle-class customer segments. Where many big department stores have gone to luxury segments, John Lewis is focusing more on volume and mass merchandise. 

This is the same approach that M&S has successfully used.

The man from Tesco

Jason Tarry spent over 30 years with the grocery giant Tesco. He saw Tesco rise in the 1990s under Terry Leahy's leadership and witness a dramatic decline under Phillip Clarke's leadership. During Dave Lewis's tenure, Jason Tarry rose to senior leadership roles in the core business of the UK and Ireland.

Mr Tarry thus has a diverse perspective on the retail industry. The Chief Commercial Officer of clearly the biggest retailer in the country is naturally an important hire for a significantly smaller company. However, this is only one part of the picture. 

If Tesco is miles ahead of John Lewis in revenue, it is also very different regarding cultural importance. John Lewis is one of the culturally most important retailers in the UK. The company’s social influence and standing are almost unparalleled in the UK. 

No other retailer has been used as the economic benchmark for the entire nation by a leading politician (Nick Clegg). Only M&S and Tesco can be compared to John Lewis as a national treasure.

The context matters

John Lewis is a very different kind of business from Tesco. It is not only the Partnership as an organisational model but also the eponymous department store from which the Partnership has gotten its name. Tesco is naturally a big non-food retailer, but the business knowledge accumulated in grocery retailing is only sometimes valuable in a department store context. Retail history is littered with examples.

The CEO of Tesco.com, John Browett, was recruited to lead Apple retail after Ron Johnson. The retail philosophy of Apple turned out to be radically different to the one in Tesco. Browett was ousted in only a couple of years.

Similarly, Ron Johnson, famous for building the Apple retail phenomenon, failed spectacularly at JC Penney. The contexts were too different, and neither man could adapt to the different contexts.

John Lewis has also recently experienced this. The previous chairwoman, Dame Sharon White, was the first chairperson outside of the Partnership. The previous five chairmen had worked and grown within the Partnership. They had first-hand knowledge and extensive experience in how the business operates.

Sharon White’s tenure as chairwoman won’t be remembered as the best in the company’s long history. Honestly, Sharon White was not dealt a fair hand initially. After big investments in new stores, the Partnership was financially in a difficult situation. Early on in her tenure, the world also faced the pandemic.

The time of Sharon White will still be remembered from ill-fated attempt to diversify the Partnership outside retailing, such as building homes. The strategy was to generate 40% of profits from outside retail. The most controversial of the initiatives was the plan to consider outside investors for the famous employee-owned model of the Partnership.

Will Jason Tarry be better?

Jason Tarry certainly will not have the shortcoming that Sharon White has been criticised for most: lack of frontline retail experience. The 33 years of experience from Tesco will guarantee that Mr Tarry won’t lack the expertise.

The big question is whether that knowledge is what John Lewis needs, with the emphasis on the John Lewis brand. Waitrose will get a big efficiency boost from Mr Tarry’s experience. One must remember that Waitrose should not become a ”small Tesco.” The value propositions are miles apart.

This is where the only question looms regarding Jason Tarry’s choice as the new chairman. He does not possess the experience nor the in-depth understanding of the unique culture set up by Spedan Lewis back in 1920. 

In the best case, Jason Tarry helps John Lewis and Waitrose improve their supply chain and sourcing capabilities, making the organisations much more efficient and profitable. 

The risk can be that he does not see the context, tries to force too much of the Tesco model, and cuts the amount of staff and investment into the stores, reducing the overall experience and service levels. After all, they are where the difference between John Lewis and Waitrose is to Tesco.

Jason Tarry has a great benchmark, which he has seen from close up. Dave Lewis was parachuted as the CEO of Tesco in a very difficult situation. He came from a distinctively different environment (global FMCG brand Unilever). However, Mr Lewis was able to adapt his management to the new context, still bringing a fresh perspective to the private label branding, among other things.

Ideally, Jason Tarry could do the same for John Lewis as Tim Cook has done at Apple. He was brought in to streamline the Apple supply chains and operations. He has done precisely that without destroying the elements that differentiate the company.