Dave Lewis, Tesco CEO invited a group of journalists and analysts along to Tesco Head Office in Welwyn Garden City today, the purpose to brief us on the progress to date on the turnaround plan and the next steps along the journey. I went along to hear what he and his team had to say.
Let me begin by getting this out of the way; in the recent past I confess that I haven’t been one of Tesco’s greatest fans. It wasn’t scoring in many areas especially on price, product and place and the brand had lost much of its cachet, it had become an overbearing giant. I wasn’t alone in shunning it and in true Brexit style, the Great British public gave ‘the establishment’ a sound kicking – just to remind it who was boss.
But the Tesco of today, whilst still very much on a journey, is a different beast to the one Dave Lewis inherited when he joined 2 years ago. If the evidence of today is anything to go by, out has gone the culture of alpha male egos, replaced by a more conciliatory and collaborative approach. The message is clear, this comes from the top.
This became a bit of a mantra for the morning we spent with the Tesco Board – clearly it is all about re-building the brand and importantly the trust in the brand and the fruits of this are beginning to show. Only this week Kantar reported that sales grew 2.2% in the 12 weeks to November 6th, the fastest growth in 3 years.
So, can we expect wholesale changes from Tesco? Well, no – at least not on today’s evidence. Whilst there were no major announcements, what was presented was an update on the six point turnaround plan which is being executed in a very deliberate and methodical fashion.
- Rebuilding the brand
- Operational savings
- Generating cash from operations
- Targeting a 4% operating margin
- Generating value from property
One of the most striking perhaps are the plans to re-purpose property and space. Although not going into any detail of the stores this would affect, we can expect to see Tesco embarking on a programme of building on existing store sites to utilise what it refers to as its ‘air rights’ ie. the air above each store. Quite how far this extends will be interesting to see but we should expect to see flats and new retail space created in Tesco car parks.
“Clearly it is all about re-building the brand and importantly the trust in the brand and the fruits of this are beginning to show”
And after the turnaround plan update, a tour of the Tesco retail innovation centre – this the inner sanctum rarely seen by outsiders, there to view some of the thinking behind new ranging and product in fresh, bakery, packaged products (biscuits to you and I) and of course Christmas.
Progress and plans for greater efficiency along the food chain were also presented – however, working with the growers to reduce wastage didn’t appear too innovative, I would have expected this as part of business as usual years ago. And in a way, for someone who attended the Wired Retail 2016 event only the day before and whose head was still filled with such as AR, VR, AI and bots, there wasn’t much innovation on display.
But this shouldn’t be allowed to detract too much from the event. Being more open and transparent is a natural thing to do as part of re-building trust for anyone or any business and Tesco are to be applauded for their efforts in this regard. And whilst it may have been short on revelations, the message from the morning was clear, yes there is still an awful lot of work to be done, however, the ship has been steadied and is finally getting back on the right track. A feat which, 2 years ago, seemed a long way off.
That has to be good news for all of us.
Andrew Busby is ranked 25th most influential UK retail twitter account and founder of Retail Reflections & The Retail Advisory Board. He is a regular contributor to Retail Week and a member of the IBM Futurist programme.