Tesco 2013 Annual Report Download - page 11

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7
Tesco PLC Annual Report and Financial Statements 2013
OVERVIEW BUSINESS REVIEW PERFORMANCE REVIEW GOVERNANCE FINANCIAL STATEMENTS
Our UK business is more competitive, performance relative to the market has improved
and our margins have stabilised, as planned, and there is still much more to come. The scope
for further improvement means that this objective remains our most important priority.
I am pleased with the progress we’ve made, but I am equally pleased that we have the
opportunity and plans for that progress to continue.
With the new UK management team now bedded in, in January this year I felt able to step
back from the day-to-day running of the business, which I had assumed temporarily in March
2012. Chris Bush, who has over 30 years’ experience in Tesco, has taken over the leadership
as UK Managing Director.
The strategic importance of Tesco Bank to the Group is being increased by the impact of the
internet on the way our customers shop – and I believe it is a key part of our multichannel
future. It will provide the means for more and more of our customers to transact online using
Tesco financial products. Several years of infrastructure build and the wider challenges that
the whole banking sector has had to deal with – from more careful management of risk
to PPI claims – have held back performance. The Bank plays an important role in driving
increased loyalty for Tesco and we are giving even more focus to delivering the best possible
products and prices to our Clubcard customers.
(ii) Drive sustainable growth through multichannel leadership
I believe establishing multichannel leadership – combining digital and online seamlessly with
our existing excellent physical store network – is going to be critical for our future success.
We’ve made good progress – we’re the largest internet retailer of food in the UK and we’re
getting bigger and better in clothing and general merchandise – but the opportunities
remain huge.
The judgements we make today about how we respond to the new digital era will profoundly
affect the kind of business Tesco becomes in the years ahead. The internet and social media
are rapidly changing the way people live their lives; the way they shop and what they expect
from us – not just in terms of goods and services, but also what we stand for and how we
contribute to society.
The speed of that change is accelerating and if we are to lead this revolution in our industry,
I believe we must move faster and embrace it.
Calling an end to the big store space race and beginning a move to refocus our investment
away from large stores, particularly hypermarkets, to convenience and online has been
followed by an accelerating pace of change over recent months in all our businesses and
geographies. For example, we are increasing our investment in technology and £500 million
of our total capital spend will be devoted to technology, enabling us to create a seamless
blend between our stores and online businesses.
A good example of this change in emphasis is blinkbox. We are already one of the leading
retailers of films, TV series, music and books in the UK. Given the rapid pace of change
in the way customers are buying entertainment products, we have been working to develop
a range of new digital services. In March 2013 we launched Clubcard TV using the blinkbox
platform, a free service providing family-friendly films and television series to our most loyal
customers. In the next few months, we will be launching blinkboxmusic and blinkboxbooks,
demonstrating our commitment to providing the very best entertainment as easily as
possible for our customers.
Going forward, we will be applying this thinking and experience to our international markets
around the world.
“ Given the rapid pace of
change in the way customers
are buying entertainment
products, we have been
working to develop a range
of new digital services.”
“ The strategic importance
of Tesco Bank to the
Group is being increased
by the impact of the
internet on the way our
customers shop – and I
believe it is a key part of
our multichannel future.”