Tesco 2009 Annual Report Download - page 15

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REPORT OF THE DIRECTORS
Tesco PLC Annual Report and Financial Statements 2009
It’s been a tough year for many of our customers. Consumer confidence
has fallen as people worry about unemployment and are struggling to
manage their household budgets. Not surprisingly, there has been a
shift in our customers’ priorities – our research has shown that price
is ranked as the most important by a margin not seen in two decades.
Therefore, we believe our job is to be on the side of customers, listening
to them and doing what we can to help them spend less.
At the time of the last recession we launched Value lines – the
famous blue and white stripes – so we’ve long been able to provide
the cheapest grocery shop in the country, discounters included.
This recession has provided a new challenge because although
customers tend to shop around more for the best prices when times
are hard – it doesn’t mean they want to compromise on quality of the
shopping trip or on choice. That is why this year we made the biggest
change to our range in a decade, launching around 500 new products
as part of our ‘Discount Brands at Tesco’ initiative. The new range
means that every customer can have a product to match their budget
without compromising on choice or quality. It creates a completely
new way to shop for customers who want to spend less.
As well as introducing more affordable products we have been working
hard to cut prices across the store. To help us do this we have been keeping
very good control of costs and have put more focus on our efficiency
saving programme we call Step-Change. This programme has delivered
£540 million of productivity and other savings in the year, most of which
have been reinvested in improving our shopping trip for customers.
This programme involves many projects right across the business
which change the way we do things to drive efficiency. Many of today’s
savings were conceived and planned years ago and they are a result
of productivity projects that span the whole business, from stores and
depots to the office. They range from reducing the amount of energy
we use in our stores to introducing better ways of working to improve
our efficiency by making things better for customers, simpler for staff
and cheaper for Tesco. For example, in the last year we have saved
52,000 deliveries to our stores by using larger-fill double-decked
vehicles, which in turn have also saved 12 million road miles.
We’ve also introduced innovative technology which allows us to
electronically check-in bread and milk deliveries at our depots,
eliminating substantial paperwork and administration.
We have picked up the pace on a number of these long-term
cross-functional Step-Change projects and plan to deliver similar
savings in the current year of around £550 million. These savings
will continue to go back into improving our offer for customers.
Making things better, simpler and cheaper is part of our culture at
Tesco and all our people are encouraged to suggest new ideas on how
we can achieve this.
Core UK
Everyone in the business understands the way we work – to make
things better for customers, simpler for staff and cheaper for Tesco.
At a time when customers are feeling the pinch and our competitors
have improved, this philosophy is more important than ever.
30%
Around 30% of our customers buy something from our
‘Discount Brands at Tesco’ every time they shop.
12m
road miles saved with
double-decked trucks
One-in-front promise
Millions more customers didn’t have to queue at the checkout
last year thanks to our one-in-front promise.