Tesco has been crowned Grocer of the Year for 2004. Siân Harrington charts the strategic growth of a British giant
It is the UK’s biggest retailer and has entered the Global Premier League of grocery chains. It takes one in every £8 spent in British retail. This year, group sales jumped by nearly 19% to more than £33bn while pre-tax profit rose 17.6% to £1.6bn. Its out-performance of the UK retail market was the highest since records began. Small wonder, then, that Tesco was the unanimous choice to take the first Grocer of the Year crown in The Grocer Gold Awards.
This new accolade recognises the company judged to be the best grocery retailer in the business.
Leading analysts, top business journalists, non-grocery retailers and leading suppliers were polled by The Grocer. They were asked to nominate the grocery retailer they felt had been the outstanding performer in the following criteria: quality of management, financial performance, customer focus, strength of supply chain and commitment to corporate social responsibility (including employee relations).
Tesco swept the board, securing nearly double the overall votes of nearest rival Asda. But it was closely fought when it came to individual criteria, with just one vote between Tesco and Morrisons on both financial performance and supply chain. And, although it came top in the other four criteria, Tesco still has some work to do on CSR. The group barely registered on this radar, with Asda just pipping the Co-operative Group to take the top spot.
Only one retailer stands out when it comes to quality of management and customer focus, however. Tesco secured twice as many votes as its nearest rivals - Asda and Waitrose respectively - in these categories. Its strength in customer focus is highlighted by it also securing the Best Consumer Initiative award (see right).
Since sweeping into the top spot in UK grocery Tesco consistently manages to prove it can continue to deliver more each year to its customers, shareholders and employees.
It has achieved this through a four-part growth strategy: core UK business, non-food, retailing services and international. This strategy was set out seven years ago at a time when Tesco had little or no experience in the latter three areas.
This year sales in the core UK market grew more than 14%, with a 6% like-for-like increase, prompting chairman David Reid to call this year’s performance “exceptional”.
This strong growth is a result of continued investment in price - nearly £200m over the year; the expansion of Extra stores, with 21 coming on stream over the year; and the aggressive push into convenience, with Tesco now having a 5.9% share of this growing part of the food market.
Non-food is now a scale business as Tesco drives forward its plan to be as strong in non-food as it is in food. It is now the number one retailer in the baby goods market and has achieved 60% sales growth in DVDs this year. Its clothing offer is the fastest growing in the UK, thanks to the development of the Cherokee and Florence & Fred brands and complete overhaul of its clothing supply chain, including new distribution facilities, new supplier relationships and dedicated staff in store.
In retailing services Tesco’s share of profit from personal finance was £80m and the company is opening nearly 50,000 new accounts a week. The latest stage in its strategy is developing a telecoms business. Tesco.com achieved sales of £577m from delivering 120,000 customer orders a week. Profit was up from £12m to £28m this year.
International has also performed well with sales up 29% and profits rising by 44%. An additional 3m square feet of new space came from the opening of 37 hypermarkets while Tesco also bought Turkish hypermarket business KIPA and Japanese convenience operator C Two-Network.
Tesco’s outstanding performance each year continues to thwart any suggestion that its rate of growth is unsustainable. Says Reid: “We are delivering in all areas of our business. We have a strong momentum and there is more to come.”
However, chief executive Sir Terry Leahy insists the company is not resting on its laurels. “Size is no protection. Customers judge you every day and if you fail to serve them then they will punish you.”
The sponsorship of Mother & Baby magazine’s Save a Life campaign by Tesco’s Baby & Toddler Club was the overwhelming winner in this category, described by the judges as “being in a class of its own”.
The Baby & Toddler Club is the most successful club for pregnant women and parents of children under five, with more than 550,000 active shoppers as members. Judges were particularly impressed by the way in which Tesco is able to find new ways of keeping the story going. In 2003 that meant sponsoring a survey to discover the first aid ability of carers, parents and grandparents. Tesco launched Save a Life with Mother & Baby in 2000. The campaign runs courses to teach parents and carers first aid and accident prevention techniques. The retailer generated nationwide media coverage through the survey of 2,000 parents and carers.
The judges were also impressed by how the campaign
not only deepens Tesco’s relationship with some of its most valued customers, enabling it to steal a march on rivals Boots and Mothercare, but also
provides a valuable service to the community.
One judge says: “It shows Tesco is still head and shoulders above other players in the market.”
It is the UK’s biggest retailer and has entered the Global Premier League of grocery chains. It takes one in every £8 spent in British retail. This year, group sales jumped by nearly 19% to more than £33bn while pre-tax profit rose 17.6% to £1.6bn. Its out-performance of the UK retail market was the highest since records began. Small wonder, then, that Tesco was the unanimous choice to take the first Grocer of the Year crown in The Grocer Gold Awards.
This new accolade recognises the company judged to be the best grocery retailer in the business.
Leading analysts, top business journalists, non-grocery retailers and leading suppliers were polled by The Grocer. They were asked to nominate the grocery retailer they felt had been the outstanding performer in the following criteria: quality of management, financial performance, customer focus, strength of supply chain and commitment to corporate social responsibility (including employee relations).
Tesco swept the board, securing nearly double the overall votes of nearest rival Asda. But it was closely fought when it came to individual criteria, with just one vote between Tesco and Morrisons on both financial performance and supply chain. And, although it came top in the other four criteria, Tesco still has some work to do on CSR. The group barely registered on this radar, with Asda just pipping the Co-operative Group to take the top spot.
Only one retailer stands out when it comes to quality of management and customer focus, however. Tesco secured twice as many votes as its nearest rivals - Asda and Waitrose respectively - in these categories. Its strength in customer focus is highlighted by it also securing the Best Consumer Initiative award (see right).
Since sweeping into the top spot in UK grocery Tesco consistently manages to prove it can continue to deliver more each year to its customers, shareholders and employees.
It has achieved this through a four-part growth strategy: core UK business, non-food, retailing services and international. This strategy was set out seven years ago at a time when Tesco had little or no experience in the latter three areas.
This year sales in the core UK market grew more than 14%, with a 6% like-for-like increase, prompting chairman David Reid to call this year’s performance “exceptional”.
This strong growth is a result of continued investment in price - nearly £200m over the year; the expansion of Extra stores, with 21 coming on stream over the year; and the aggressive push into convenience, with Tesco now having a 5.9% share of this growing part of the food market.
Non-food is now a scale business as Tesco drives forward its plan to be as strong in non-food as it is in food. It is now the number one retailer in the baby goods market and has achieved 60% sales growth in DVDs this year. Its clothing offer is the fastest growing in the UK, thanks to the development of the Cherokee and Florence & Fred brands and complete overhaul of its clothing supply chain, including new distribution facilities, new supplier relationships and dedicated staff in store.
In retailing services Tesco’s share of profit from personal finance was £80m and the company is opening nearly 50,000 new accounts a week. The latest stage in its strategy is developing a telecoms business. Tesco.com achieved sales of £577m from delivering 120,000 customer orders a week. Profit was up from £12m to £28m this year.
International has also performed well with sales up 29% and profits rising by 44%. An additional 3m square feet of new space came from the opening of 37 hypermarkets while Tesco also bought Turkish hypermarket business KIPA and Japanese convenience operator C Two-Network.
Tesco’s outstanding performance each year continues to thwart any suggestion that its rate of growth is unsustainable. Says Reid: “We are delivering in all areas of our business. We have a strong momentum and there is more to come.”
However, chief executive Sir Terry Leahy insists the company is not resting on its laurels. “Size is no protection. Customers judge you every day and if you fail to serve them then they will punish you.”
The sponsorship of Mother & Baby magazine’s Save a Life campaign by Tesco’s Baby & Toddler Club was the overwhelming winner in this category, described by the judges as “being in a class of its own”.
The Baby & Toddler Club is the most successful club for pregnant women and parents of children under five, with more than 550,000 active shoppers as members. Judges were particularly impressed by the way in which Tesco is able to find new ways of keeping the story going. In 2003 that meant sponsoring a survey to discover the first aid ability of carers, parents and grandparents. Tesco launched Save a Life with Mother & Baby in 2000. The campaign runs courses to teach parents and carers first aid and accident prevention techniques. The retailer generated nationwide media coverage through the survey of 2,000 parents and carers.
The judges were also impressed by how the campaign
not only deepens Tesco’s relationship with some of its most valued customers, enabling it to steal a march on rivals Boots and Mothercare, but also
provides a valuable service to the community.
One judge says: “It shows Tesco is still head and shoulders above other players in the market.”
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