Hello ladies and gentlemen. It is a pleasure for me to be here today, and I have been looking forward to speak to you at this conference.
First I will like to introduce myself. My name is Frederik Hovmark Pedersen and I am a PR assistant at Tesco. I have been at Tesco for several years know, I have had many different jobs at Tesco, and I have therefore got a lot of knowledge about the company.
My lecture will be about some of the current problems that Tesco are facing and how we are working hard on solving them. I will shortly introduce you to Tesco’s problems and then spend most of my time talking about what we have already done at Tesco to solve these problems and what we will do in the future.
I am going to speak for about 25 minutes, and then we can spend the remaining 20 minutes on any questions you may have or discuss in more detail certain aspects of the subject matter. And as I have set aside approximately 20 minutes for questions, I would like you to keep your questions until then. Therefore it could perhaps be a good idea, if you wrote down the questions that you might come up with, so that you will not forget them. And furthermore, you do not have to copy what I am going to show you on the screen. Copies of the slides will be available on the table outside this hall.
Now first let me introduce you to some of the problems that Tesco are facing. The major problem is that Tesco’s sales are going down. This is then a result of many facts. One of them is the fact that we need more staff. Which has again resulted in worse customer service and shelves that are often empty. And we have actually got a lot of complaints from customers who were not satisfied with the service in our shops. Besides the service the shops also looked to industrial and “cold”.
Another major problem is Tesco’s sale of non-food which is not going very well because of the e-commerce, which makes it easy for people to buy everything online instead of buying it in Tesco’s shops. And then Tesco have made some obvious mistakes, such as the fact that we didn’t have fresh coffee for people in the morning, or the fact that our selection of frozen food were not big enough in the US, where they eat a lot more frozen pizza and so on than we do here in England. Finally, our Fresh and Easy has failed. These problems have then let to the fact that Tesco’s shares have fallen by 20% the last 12 months, and that the market value of Tesco has been cut off by £ 5 billion.
But what do you then do when you are in a situation as bad as the one Tesco is currently in? Well, here is what we are going to do to turn around the negative trend.
First of all our new CEO Philip Clarke, who is the man who has been brought in to turn things around, has set up six important focus areas. Tesco needs:
- Better service.
- Better stores.
- More value for money.
- More focus on clicks and bricks.
- Better quality.
- Improvement to the brand and marketing.
So as focus area number one says we need better service. And to do that we are starting to listen to our customers. We are sort of reconnecting to them. We are arranging stores according to customer profiles. And the staff at Tesco will in the future know how the customers behave, so that we can personalize their shopping and give them the best experience. We also need more dedication from the staff. And to solve the problem with too little staff we are going to hire approximately 20.000 new employees. So as you can see this is also something that create jobs for a lot of people.
We have then redesigned our shops to create better stores. They have got a new graphic, new signs, and we are using soft colors because we want to give our shops a warmer and brighter look, in order to give our customers a warmer and more welcoming felling. Then we have also put our focus on smaller stores with fresh food, because this is what the customers want, and it is something that they cannot buy on the internet.
Furthermore we have launched our new products called everyday value. These are products where value for money is in focus. They are at a higher quality and made from better ingredients. And the design of the packages have been improved for the better as well.
Another thing that will be very important for Tesco in the future is e-commerce. The internet is basically changing the way people live and shop. So we will invest a lot in our online shop. And we have already decided to spent £ 150 million just on our online shop. Doing this is also a way of putting focus on the new generation of customers who are born with computers and the internet.
An idea we also got were virtual shopping at airports. I am sure that you can relate to the problem that you return from your holiday, and you realize that have not got any food in your fridge. We are then offering people the opportunity of ordering products in the airport. And the products will then be delivered to their home, so that the products are there when people return from their holiday. The really smart thing is then that you order by using your smartphone to scan a barcode for the products you want. Yet it is still being tested out and we have given it a two weeks trial period. But we are sure that it will become a success because of the fact that more than 90% of the people that have a smartphone are using them on the go. And that is a real lot of people considering 9 out of 10 have smartphone. So the smartphone will and is transforming the way people live and shop.
Another idea is Click and Collect. This is basically an idea that allow our customers to order things online and then collect them in any store the next day. Ordering online also means ordering on your phone. And to do this we have developed a Tesco app.
So right now Tesco is at a turning point and the future is looking bright. But changing Tesco is not something you just do overnight. It is a process that has already been going on for a while. But it is definitely also a process that will continue for a very long time in order to make Tesco as good as possible for our customers. And overall we are going to invest more than £ 1 billion to revive the sales.
So thank you very much for listening to me. And now let’s move on to your questions.