Tesco 2014 Annual Report Download - page 7

Whilst the direct impact of the meat
contamination issue last year was limited
to just four of our products, we have made
marked improvements in the supply chain,
shortening its length and focusing on
provenance, greater control and traceability.
Through our world-class testing programme,
we have tested over 5,300 products and we
are the first major retailer to offer two-year
direct contracts for beef and lamb farmers
right back to the farm gate. More than 300
farmers have signed up already.
(iv) Price & Value
Customers are actively seeking the best
value, and this is more important than
ever in a market which has become even
more competitive over recent months. It is
essential that customers can trust our prices.
We want prices to be stable, we want them
to be logical and, of course, we want them
to be competitive. Our Price Promise has
now been in place for over a year and
provides instant reassurance to customers
that on fresh foods, on own-label and on
branded products they will not lose out
at Tesco.
Every customer perception measure on
price has improved over the last 12 months,
but there is still more to do on pricing.
We know how important it is to customers
that they get the best possible prices on lines
that matter most to them. That is why in
February, we announced that we are
accelerating the pace of change including
an initial investment of £200 million in
bringing down, and keeping down, prices of
key lines, starting with milk, carrots, onions
and eggs. You can be sure that we will continue
to focus relentlessly on ensuring we are
competitive in the marketplace and where
we need to do more, we will do more.
(v) Brand & Marketing
Clubcard is more important now than it has
ever been before. It is at the core of providing
a differentiated, personalised offer and it
allows customers to choose how to unlock
greater value for themselves. It is at the heart
of our unique relationship with our customers
and we need to use the power of Clubcard to
personalise how we communicate with and
serve our customers, providing them with
offers and services which are relevant and
tailored to how they live their lives. We are
using Clubcard to deliver more value for
customers and have delivered almost 60
million personalised mailings this year for
products that customers buy week in, week out.
A good example of the power of Clubcard
and of the advocacy that it can drive is
the launch of Clubcard Fuel Save. It is a
completely new concept for the UK retail
industry. Customers can earn money off
their fuel, just by doing their normal
shopping. It is inclusive – every penny
counts towards the level of saving whether
customers are shopping online for their
rating customer service and staff helpfulness
as excellent has improved by 40% since
2012. We know we need to do more in order
to make service a point of difference for us
and to deliver excellent customer service for
every customer on every shopping trip. This
will remain a key priority for the UK business
in the coming year.
(ii) Stores & Formats
Over the last two years, we have refreshed
over a third of our UK stores in some way.
This work has involved improvements to
store environments and has prioritised the
departments that matter most to customers,
primarily fresh food. We have applied the
learnings from each phase of the refresh
programme to the next, enhancing our
approach as the programme has evolved.
As a result, there are some newer initiatives
that we will seek to introduce to some of
the stores that formed the early part of the
refresh programme.
Following the trial stores we completed in
2012/13, our refresh programme to date has
been more focused on our Express format
and on our smaller Superstores. Given the
change in shopping behaviours I mentioned
above, our larger stores have been a drag
on performance and this is one of the
most important areas that we need to
address. Therefore, the focus of our refresh
programme will now be on reinventing our
largest stores to ensure that they are worth
the trip for customers.
This year we have tested a number
of ingredients for our Extra refresh
programme, and begun to roll out a
range of components to help make these
stores relevant destinations that customers
actively choose to visit. In 2014/15 we will
refresh 110 of our Extra stores, aiming to
make them even stronger destinations.
More of the ingredients will appear in these
larger stores and typically they will feature
strong clothing and general merchandise
as well as tailored new food experiences,
such as Giraffe, Euphorium, Harris+Hoole
and Decks dependent upon the local
customer. We will also be working hard to
put ‘Food First’ and create the best ranges
of fresh foods. We are looking forward to
accelerating the appearance of these new
features in our stores over the next three
years. While this refresh work causes some
short-term disruption, the resulting uplifts
will be long-lasting.
(iii) Range & Quality
This year, we completed the work to materially
improve our 8,000 core Tesco products.
Following the relaunch of our
finest* range
in October, we relaunched our Healthy Living
range in January. The customer response to
the improvements we have made across our
Tesco products has been pleasing, and our
own-label sales account for around half of
our total UK sales (excluding petrol).
This year, we completed the work to materially
improve our 8,000 core Tesco products.
“ It is essential that
customers can trust our
prices. We want prices
to be stable, we want
them to be logical and,
of course, we want them
to be competitive.”
04 Tesco PLC Annual Report and Financial Statements 2014
Report from the Chief Executive continued