Tesco 2012 Annual Report Download - page 31

Group skill and scale supports each of our core activities: utilising
Insight, Buying, Moving and Selling. Utilising Insight as a Group, with a
loyalty scheme in all of our markets, means we can continually innovate
the customer offer. Our Turkish business launched Clubcard this
year, which would not normally be possible for a business of its size.
Buying as a Group is cost-effective, creating headroom to invest in the
customer shopping trip, such as by sourcing consumables in Central
Europe as a Group. Moving as a Group, with distribution centre
blueprints, systems, and the early stages of borderless distribution,
makes our deliveries simpler and faster, with new distribution centres
opened in both Poland and China this year. Selling as a Group, with
our Extra format already in eight international markets, including the
Czech Republic, Thailand and China, offers customers a better
shopping experience.
Of course we don’t believe in ‘one size fits all’. There are many things
that are best done locally because customer tastes and lifestyles are
not uniform. Our businesses are run predominantly by local teams,
not by expats, so that our operations can be close to the customers
we serve, and our local ranges both support our smaller suppliers and
give customers a tailored product offering.
Developing our people:
Our most important asset
Great service can make a customer’s day, and we achieve this when
our people live the Tesco Values: ‘No one tries harder for customers’
and ‘Treat people how we like to be treated’. Our business is built on
the commitment of more than half a million people across the world
and, in return for their commitment, we offer them good jobs and
careers with Tesco. Developing our people takes many forms, from
training in our state-of-the-art training academy in Asia, to offering jobs
to the long-term unemployed through Regeneration Partnerships and
supporting the development of women to management positions.
Creating valuable property:
The best located and best designed stores
Our site research and property capabilities enable us to identify
and develop the best sites for our stores. Tesco has great depth
of experience in property development all around the world.
Optimal sites for new store developments and extensions are identified
by our site research departments. We have a flexible approach to
property acquisition, considering both freehold and leasehold sites
and assessing each opportunity on its merits. Using a range of data,
such as demographics and competitor activity, we forecast sales
for a new store to a high degree of accuracy, so that we can develop
the stores with the greatest potential.
Once a site has been identified, approved and secured, our property
development and construction teams design and develop the site. Years
of experience have fed into Group-wide blueprints and specifications so
that all of our development takes place to the highest standard.
In many of our international markets, Tesco owns or leases whole malls,
which are anchored by a Tesco hypermarket. Operating the mall and
renting out the space to other retailers, cafés and cinemas creates a
great destination shopping centre for customers, as well as bringing
in significant rental income, which makes Tesco one of the largest mall
operators in the world.
Operating responsibly:
Ensuring that growth is sustainable
By operating responsibly, we not only benefit and secure the future
of our business but we can bring real benefits to the communities in
which we operate.
At the heart of our commitment to operating responsibly is providing
our customers with good quality, safe and affordable food. This is easily
taken for granted in developed economies, but can be a real challenge
in economies with low penetration of modern retail and under-
developed supply chains.
We can only achieve this by working with our suppliers to ensure
our supply chain is both resilient and efficient. Strong, fair, mutually
beneficial, long-term partnerships with suppliers, from local to global,
are at the heart of this. The strength of our supply network was evident
during the Thai floods this year, enabling us to secure essential supplies
from Malaysia and other markets.
We are committed to the responsible sourcing of raw materials,
ensuring the resilience of our supply chain and managing our impact
on the environment. We work with the wider industry on core issues,
such as water scarcity, and co-chair the Sustainability Steering Group
of the Consumer Goods Forum, which has pledged to help end
deforestation by 2020. We aim to be a zero-carbon business by 2050
and are mapping the biggest opportunities to cut carbon in our supply
chain, as well as continually exploring new energy efficiency measures
to be introduced across the Group.
Innovating our offer:
Constantly improving our customer offer
To continue to meet customers’ changing needs, we are constantly
innovating our offer in a whole variety of ways. Innovation can
bring greater convenience to an existing way of shopping, as with
self-service checkouts. It can offer customers a new way of shopping,
as with Click & Collect grocery or our virtual stores in South Korea.
It can combine our presence in shops and online into a compelling
customer proposition: for example, a customer registered with Blinkbox
can automatically receive a digital copy of most new Hollywood
releases when they buy the DVD with a Clubcard in store. By drawing
on the breadth of our expertise and by always putting the customer
first, we continue to serve customers how they want to be served in
a changing and increasingly joined-up world.
Building the Tesco Brand:
To be seen as the most highly valued business in the world
Through everything we do, we strive towards our vision of being seen
as the most highly valued business in the world – valued not only by
our customers, but also by the communities we serve, our staff and our
shareholders. Protecting and developing our brand reputation is the
foundation of customer loyalty and of how we are seen by our many
stakeholders and enables our business model to operate effectively. For
example, our diversification into services such as Tesco Bank is built on
customers’ trust in the Tesco brand to offer good value, simple solutions
and great customer service; and our recruitment and retention of great
staff depends on our reputation for customer service and offering good
jobs and careers.
Tesco PLC Annual Report and Financial Statements 2012 27
STRATEGIC REVIEW PERFORMANCE REVIEW GOVERNANCE FINANCIAL STATEMENTSOVERVIEW
Chief Executive’s review Strategy in action Business model