Tesco's troubles can turn around
Tesco may have run out of Jewish chief executives but as a supermarket group it has remained true to its roots. And I am not just referring to its large stashes of discount matzah at this time of year.
A guiding principle of the business that can be traced back to its founder, Sir Jack Cohen and his late sons-in-law, Hyman Kreitman and Sir Leslie Porter is the group's belief in owning the premises from where it does business.
This belief that Tesco is as much a property company as a grocer was handed down to their successor Lord MacLaurin and those who followed, Sir Terry Leahy and now Philip Clarke.
Leahy has made it clear that one of the secrets of the company's success under his leadership, when it outpaced all its competitors, was its belief in land. It was, for instance, the anticipation of the public's interest in large, edge-of-town stores that allowed it to leap over is competitors over the past two decades to win 30 per cent of the UK grocery market.
Moreover, when Tesco had exhausted the out-of-town possibilities it became the first of the big grocers to head back to the high street, stealing a march on its competitors once again.
The property message has not been confined to domestic operations. As it has expanded overseas, challenging others to become the world's largest food retailer, it never forgot the property motive. In Eastern Europe it was among the first Western countries to move in after the Iron Curtain was erased, snapping up sites across Poland, the Czech Republic, Hungary and more.
It not only became the biggest retailer in Thailand but it also invested in property. In China its idea, pioneered by the current, much-criticised Tesco boss Phil Clarke, was to take control over the whole development process by creating Tesco malls. It would build and plan the shopping centres to Western specifications, be the anchor store and bring in other overseas retailers. Last month we gained some insight into just how valuable its overseas property could be when it launched a Tesco property fund in Thailand, offering investors a chance to invest in 17 shopping malls and raised £379 million for future investment in Thailand. It was one of the largest initial public offerings in the country's history.
Anyone reading about Tesco of late might view it as a basket case. After decades of superior growth to its main UK rivals: J Sainsbury, Asda and Wm Morrison, it started to stumble over the Christmas period and has never really regained momentum.
There have been a series of departures from the UK retail arm culminating with the exit of UK chief executive Richard Brasher after his "Big Price Drop" - which cost the company £500 million in margins - failed to yield the uplift required.
Clarke, who created the separate UK structure when he took over from Leahy in 2011 so that he could concentrate on overseas, online, banking and other expansions, has now taken back the reins of the home operations following a major setback to the company's shares.
It is not hard to understand what has gone wrong and how it can be corrected. Most importantly, Tesco has a 30 per cent market share and that is about as far as it will ever be allowed to go in the UK grocery market for competition reasons. Every single store it buys now has to be scrutinised by the Competition Commission.
So the focus will be online where Tesco is already the largest player in the market. It is also clear that with so much focus on building the overseas business, the UK operations have been somewhat neglected. Stores have started to look dated compared to rivals.
Yet these things are fixable. Not all the grocers can gain market share at the same time. What makes Tesco different is its property portfolio. It has an unused land-bank in the UK which is said to be worth £600 million alone, aside from the property on which its stores sit. The company's ability to turn its overseas property portfolio into cash for future development has been shown in Thailand and similar schemes can be expected elsewhere.
Sure there is disappointment in current trading performance in Tesco's home market but the group is underpinned by valuable property assets. And there is enough excitement overseas to start underpinning future performance.
Alex Brummer is City Editor of the