Tesco 2011 Annual Report Download - page 18

The business review analyses the performance
of the Tesco Group in the financial year ended
26 February 2011. It also explains other aspects
of the Group’s markets, results and operations,
including strategy and risk management.
The Directors present their Annual Report to
shareholders on the affairs of the Group and
Company, together with the audited financial
statements of the Company for the 52 weeks
ended 26 February 2011.
Some elements of the strategy remain unchanged. The goal ‘to grow
the core UK business’ is as relevant today as it was in 1997. The UK is
the largest business in the Group and a key driver of sales and profit.
There are many opportunities for further growth and so we will
continue to grow the UK core.
Another of our original goals was to be a ‘successful international
retailer’. In 1997, our international businesses generated 1.8% of
the Group’s profits. Today they represent 25% and we’re now either
number one or number two in eight of our 13 markets outside
the UK. So we’re already ‘successful’. Our next step is to be an
outstanding international retailer in stores and online.
In 1997, we were largely a food retailer so we set ourselves the challenge
of becoming ‘as strong in non-food as in food’. As our business has grown
and we offer an ever wider variety of products to customers, the term
non-food no longer does justice to all the products and services we sell.
We now aim to be as strong in everything we sell as we are in food.
Our services businesses have come a long way since we first included
in our strategy the desire ‘to develop retailing services’. Today these
parts of Tesco generate £583 million profit, representing 16% of the
Group total. To date this has been largely UK-focused, but as many of our
international businesses have now established well-known brands in
their local market, it is time to expand our ambitions and aim to grow
retail services in all our markets.
In 2007, we added a fifth element to our strategy to underpin our
commitment to communities and the environment. We’ve updated
this objective slightly by emphasising our responsibilities in these
areas. Our goal is to put our responsibilities to the communities
we serve at the heart of what we do.
There are two new strategic goals, both of which reflect the way that
Tesco has developed over the last decade and our areas of emphasis
for the future.
The first is to be a creator of highly valued brands. Our brand has
evolved from a logo above a few stores in the UK to a multitude of
store, product and service brands across the world. Building brands
gives our business more meaning with our customers. On one level,
this relates to our Retail brands such as the Tesco brand itself, but it also
refers to our Product brands such as F&F and Technika and our Pillar
brands such as Finest and Value.
Our final goal is to build our team so that we create more value.
As our business continues to grow and diversify we need more leaders
to run the many substantial business and support functions within the
Group. Our leaders not only have an important role today, but also have
a responsibility to help build a bigger and better team for the future.
Our progress in these areas is reviewed over the following pages.
Business review
Our strategy
In 1997, Tesco set out a strategy to grow the core business and diversify
with new products and services in existing and new markets. This
strategy enabled us to deliver strong, sustained growth over the past
14 years. We’ve followed customers into large expanding markets in the
UK – such as financial services, general merchandise and telecoms –
and new markets abroad, initially in Europe and Asia and more recently
in the United States.
In order to reflect changing consumer needs and the increasingly global
nature of our business we’ve evolved our strategy. The strategy now has
seven parts and applies to our five business segments – the UK, Asia,
Europe, the United States and Tesco Bank.
14 — TESCO PLC Annual Report and Financial Statements 2011
BUSINESS REVIEW
Our business