Tesco 2013 Annual Report Download - page 19

Download and view the complete annual report

Please find page 19 of the 2013 Tesco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 142

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142

15
Tesco PLC Annual Report and Financial Statements 2013
OVERVIEW BUSINESS REVIEW PERFORMANCE REVIEW GOVERNANCE FINANCIAL STATEMENTS
Our core activities
Like all retailers, we buy, move and sell products and services for our customers. They
rely on us to do these things consistently well and we strive to do them better, more
simply and more efficiently each time.
Wehaveconvenient,well-investedstoreanddistributionnetworks,withaskilledandexperienced
team and modern systems designed to help us do this reliably – as well as growing capability and
scale online. This operational effectiveness is at the core of the Tesco business model.
Winning loyalty is also about looking constantly at ways to do things differently and innovating
for customers so that our offer doesn’t stand still. Innovation comes from insight and insight starts
with listening.
We try to work out what matters to customers by talking to them – and the conversation goes on
all the time, in all our businesses, in stores and online, whether it is through our regular customer
question time sessions or social media feedback. Customers tell us what’s important to them – when
we’re doing well and, even more importantly, when we’re not. Coupling that feedback with the data
we get from Clubcard and the analysis we apply from dunnhumby – and then acting on the result – is
what Tesco is all about.
The virtuous circle
Striving for continuous improvement in operations and in the shopping trip, as well as
staying close to customers, are fundamentals but the engine of the Tesco business model
has always been a combination of scale and growth.
This remains just as true today in an environment where growth across many markets is harder to
come by. Tesco may only be as successful as a customer’s last shopping trip but our scale and how
we use it are very important to how we create value.
Buyingwellandsellingefficientlyareessentialinordertobecompetitiveforcustomers.When
we combine these really well, we deliver a great offer and customers reward us with more of their
business. The more we sell, the more we are able to work with our suppliers to achieve mutually
beneficial economies of scale, which in turn creates room to invest more for customers – in products,
categories and businesses.
Thishasservedthebusinesswellovermanydecades–butinourbusinessintheUKwesteppedoffthe
virtuous circle when the recession hit. We didn’t put enough back in for customers at a time when they
were under pressure – and our performance and reputation felt the effect. We recognised the need to
change, and last year we chose to reduce and reset our own margin to fund substantial investment in
improving the shopping trip for customers and to move the business towards stronger growth.
The key enablers
The core elements of the business model have six key enablers – including, for example,
leveraging Group skill and scale and innovating our offer – which maximise the potential
of the core activities and ensure that what we do is sustainable.
Transferring know-how, new systems and processes around the Group has become a regular part
of how we do things based on the principle of ‘invent once, deploy everywhere’. As our leadership
group–whichnumbersover500directors–gainsevenmoreexperienceinmultiplemarkets,new
technologies and approaches can be introduced quickly and cost-effectively. Loyalty and own-label
programmes,formatexpertiseandonlinetradingplatformsareallcurrentexamplesofTesco
leveraging Group skill and scale.
As keeping pace with changing consumer shopping patterns – what they buy, how, where and
when they shop – becomes ever more demanding, staying close to our customers means that we are
well-placedtoseeandtograsptheopportunitiestoinnovate.Forexample,wespendalotoftime
applyingnewtechnologyin-storesothatwecanimprovetheshoppingexperienceforcustomers.
AgoodexampleisScanasyouShop–nowin100stores–whichallowscustomerstoscanproducts
as they put them into the trolley, see how much they are spending as they go, and reduce their waiting
time at the checkouts.