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TESCO CORPORATE COMMUNICATIONS PORTFOLIO


Tesco PLC Corporate Communication Portfolio

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Chairman’s Statement

Chairman’s statement

Business Issues A great challenge for Tesco is how consumers are adapting to the change within the digital market. We have aimed to type of relationship with our customers. 2013 saw the ‘year of the tablet’, with Tesco launching the Hudl. A tablet created with customers in mind, creating a clear communicational pathway between our customers and us.

contamination of product. At Tesco, our customers always

Sir Richard Broadbent Chairman

includes a world class traceability system and the use of UK farmers and tertiary markets. We also modernised our

Supplier Relations

This year, many of our customers lost trust within the Tesco

Financial Review

Throughout the year, Tesco has built upon what we aimed to do last year, using our strategic aims in order to ‘Build a Better Tesco’.

Chief Executive Report

by three parameters: the strength of the Tesco brand; the internet and all the associated developments it is driving; and the potential to leverage our skill and scale internationally”.

Tesco have always had an enthusiastic approach to

“Tesco has built upon what we aimed to do last year, using our strategic aims in order to ‘Build a Better Tesco’.”

these macroeconomic markets, we have been faced with the external problems from the countries own micro

are facing these problems head on and have not backed down in trading overseas. By ‘weathering the storm’ our brand name will still remain strong when the conditions start to improve once gain.

and experienced individuals who we have working all throughout the Tesco business.

Media Relations

Management and governance changes Last year we managed to develop a largely new Executive Committee under a leadership of Phillip Clark. He has been

departure of 5 of our key members last year, was the addition of Mark Amour. Mark has become one of our Community Relations

international experience. Mark will also bring valuable - Visit www.tescoplc.com/ar2013 to hear more from Sir Richard Broadbent and other members of the leadership team.


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Tesco PLC Corporate Communication Portfolio

Chairman’s statement continued

experience in relation to digital business transition. Financial Results Looking at the end of year results from 2013/14, strategy

Sir Richard Broadbent Chairman Europe and the rest of our international ventures, we still hold the strategic aim of pursuing disciplined international growth. Within 2014, we intend to build on the strategic agreement to franchise 500 stores across India, in partnership with TATA. However our UK market is still growing with an increase of 1.4%, even though there were troubles at the beginning of the year. Within 2013/14, we aimed to continue to strengthen the UK brand, channelling our aim to establish multichannel leadership in all markets, including the three new extra format stores within the UK. In order to grow upon this increase, we aim to generate 12 more of these extra format stores within 2014/15. Our end of year dividend to shareholders marginally reduced at 14.00p, which has showed a considerable decrease to previous years. We have already built upon gaining trust with our existing and potential investors, in order to rebuild upon the shareholder dividend. With the the dividend will raise within no time at all. Our new venture into the technological market is growing at an incredible rate; with the Tesco tablet, the Hudl taking 30% of the Christmas tablet market, with sale of 15 million devices. We have achieved this through adapting to the technological trend of strong volume spending with weaker spending in current price terms, whereby we have found that Tesco customers are trusting in us to provide a well priced but good quality, reasonably priced product for all the family to enjoy. Once again it is a privilege to be extending my thanks, on behalf of the board, to everyone within Tesco. Whilst helping to ‘Build a Better Tesco’, everyone has adapted and kept a great sense of respect and perspective throughout


Tesco PLC Corporate Communication Portfolio

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Chairman’s Statement

Report from the Chief Exectutive

Chief Executive Report Financial Review

Phillip Clark Chief Executive

Once again, I have been given the opportunity to report on the past operating year. Although there have been some challenges along the way, Tesco have continued in making crucial business-minded decisions, with long-term plans in mind. Within the report I will share my observations of the year, under the following headings: • • • •

Supplier Relations

“Tesco have continued in making crucial business-minded decisions, with longterm plans in mind.”

Business of 2013/14 Adapting to the technological market Financial disclipnes & driving future growth Culture

Business of 2013/14 There were a number of major decisions and external factors, which

- Visit www.tescoplc.com/ar2013 to hear more from Philip Clarke and other members of the leadership team.

the release of the Tesco tablet, ‘Hudl’;

Community Relations

whereby we have had to make some challenging decisions, however taking an overview of the past 12 months; we have also seen an

Media Relations

You will have heard that we have faced a serious problem with some of our outsourced beef burger products. The FSAI told us that a number of these products from the suppliers contained horsemeat. These products have been recalled and we have immediately seized any operation with the suppliers concerned. We want to take this opportunity to apologise to you, our valued customers, and give you our word that new strategic policy’s will be implemented to ensure our trust worthy brand name is once again restored.


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Tesco PLC Corporate Communication Portfolio

Report from Chief Executive continued

“Our stores and digital products play a fundamental of creating a multichannel vision”

• Devised and reviewed programme was created for use of suppliers and food testing, following failure with some of our suppliers;

with TATA India, to see the creation of 500 branded stores across the sub-continent; and • Generation of 3 Extra format stores saw us display a new type of retailing experience to our customers. Adapting to the Technological Market Within the last few years, we have been adapting to the technological changes within our sector, continuing to be pioneers and innovators within the retail industry. Our stores and digital products play a vision, with this year seeing technological changes within a number of

The adoption of Electornic Point of Sale (EPoS), Electronic Funds Transfer Systems (EFTPoS) and electronic scanners have greatly improved electronic shelf labelling and RFID chips have revolutionised and supported the policy change regarding the access to premium shelving positioning. As I said last year, we have used digital advancements to our advantage, by listening to what customers want and how they are living their of relationship with the customer. The dotcom grocery business is multichannel retailing.

adaptation of over 350 stores, with these now processing 25% of all transactions. In addition to Tesco’s vast portfolio, we played to the technological trend of strong volume spending, with weaker spending in current price organisation could adapt to a changing digital market. Financial Discinlipes and driving future growth This year has seen our business transform and move into the digital market, enabling us to become a market leader within the digital world, the 2013/14 year. As your CEO, along with the board, sustainable growth and rebuilding prioritised through our three main strategic aims: • • •

Continue to strengthen the UK business Establishing multi-channel leadership in all markets Pursuing disciplined international growth


Tesco PLC Corporate Communication Portfolio

the quality and customer perception of our in-store service. The launch of our “Price Promise’ has also helped in the aim of strengthening the UK business. Today all of our customers enjoy more options and more opportunities. Our customers have been responding positively to changes we have made to all of our stores, products, marketing and the service performance.

2. Establishing multi-channel leadership in all markets Our stores are a vital part of our multichannel vision, and throughout the year we have made continuous improvements towards ‘Building a Better Tesco’. This year has seen the development of 3 extra format stores within the UK, displaying the new type of retailing experience bringing

3. Pursuing disciplined international growth

prospect for strong investment. Learning from previous ventures, we have gained a number of lessons in internationalisation, which we will be using within the coming year to regain some of the drop in international

Supplier Relations

merchandise followed by our next generation clothing departments. These stores have performed ahead of all of our expectations, and is something we plan to advance and develop from in the future.

Financial Review

The move into the digital market has also boosted the UK performance. The introduction of the Hudl saw sales of 15m units, taking 30% of the market over the Christmas period.

Chief Executive Report

a Better Tesco’ where we have been trying to become recognised by more customers and the performance we do as a result of continuous

Chairman’s Statement

1. Continue to strengthen the UK business

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Our trading performance, particularly in the EU, has taken a drop in helped the economic growth of our European markets. Long-term the EU markets are still favourable as they are growing and multichannel development.

products.

Media Relations

A strategic agreement has been made with TATA, in India, in which we plan to brand 500 stores across the sub-continent as a composite brand. This innovative franchise aims to minimise capital expenditure

Community Relations


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Tesco PLC Corporate Communication Portfolio

Report from Chief Executive continued

Culture Here at Tesco we appreciate that as a consumer business, our values and what we strive for in terms of culture and society are a critical objective for us to maintain and uphold.

“What we represent and convey to our consumers is extremely important to us”

What we represent and convey to our consumers is extremely important to us. To ensure our Core Purpose and Values are relevant to what would current position Tesco holds within the UK. Further information on this can be found within our Tesco and Society Report. In terms of our culture and society, we can’t solve everything however we can create a clear vision for our brand in regards to the way in which Tesco operates, our focused principles and how we can build on our Core Purpose and Values to our stakeholders while earning and rebuilding trust and loyalty. Implementing this vision allowed us to create three main objectives, which will actively pursue throughout our growth as an organisation to change and improve things for the better. Employability rates for young people have become a increasing issue within the current economic climate. We want to focus on using ourselves as a major global employer to provide young people with opportunities and have already put in place six regeneration hubs around the UK. These will provide up to 500 new jobs within local communities, which we hope will build a solid foundation to advance from and eventually branch out globally. Tesco are also focusing on is creating healthier lifestyles for our customers and colleagues. In an attempt to promote healthy eating, we have launched the Healthy Appetite App that is a fun way to engage our customers with creating a healthier lifestyle for themselves. The app has already had 5.6 million downloads which we believe will positively improve our consumer’s dietary habits. Finally the nature of our organisation requires us to consider food waste as one of our main priorities. Our ‘Every Little Helps’ value supports the challenge to reduce our food waste and motivates us to be one of the leading supermarkets to carry this vision forward. Initially we will be using a system that will ensure the control of food waste is managed through the supply chain, and providing knowledge and support to our customers to manage their own food waste. With these main objectives outlined, we believe that with a collective

create a progression towards our complete vision.

determination to ensure that the shareholder value is bought back up to the value we believe that Tesco as a company is worth.

Philip Clarke Chief Executive


Tesco PLC Corporate Communication Portfolio

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Chairman’s Statement

Financial Review

Chief Executive Report Financial Review

much-appreciated shareholders. Laurie Mcllwee

“As we further work on building a better and modernised Tesco, we are still remaining realistic in our strategic approach to change.”

Group Sales (inc VAT)

faced in the past year.

placed at our doorstep by out-sourced suppliers. This I admit has caused our customers to loose trust in us, but even now only 9 months on we have seen our reputation re-building positively once again. Since this incident we have ran full reports on our out-sourced suppliers, and scandal. Putting into place random spot checks on new suppliers, as well as having detailed reports of how all their products are made and where all the tertiary goods are sourced from.

Down 15.8%

Media Relations

£69,374 Million

We took decisions to invest largely into UK business; this was our most important goal, as we wanted to re-build our reputation of being a respective leader in the market. This will help us to ensure that we are able to protect the sustainability of our long standing brand in the UK market.

Supplier Relations

Group results It has come to that time of the year where Tesco take look

Capital Expenditure

- Visit www.tescoplc.com/ar2013 to hear more from Laurie McIlwee and other members of the leadership team.

Community Relations

14.00p

Overall Dividend


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Tesco PLC Corporate Communication Portfolio

Financial Review continued

UK Segmented results

contender for when the market begins to re-build once again. Asia Results - Segmented Results

of 2013 we have still seen our UK results reach a 1.4% growth. This is due to our further investment in the UK business market. Our ‘Hudl’ claimed 30% of the overall tablet at Christmas. The total sales being 15 million tablets sold. This is due to the clear strategic planning into entering the new market, and a well formatted marketing process behind the product. This is particularly encouraging when many critics believed the market was un-reachable, due to there being two main market leaders. This success has given us the foundations to carry on our investment in the UK technology market, and increase the R&D (Research and Development) into the next generation Hudl, which will be built on the existing product and look forward to claim more of the market. Tesco UK also saw the home grocery shopping rolled out in 100 cities and increased by 17%. This has opened up opportunities to reach new target markets, of which were potential, as well as increasing our brand name association in being a reliable and successful brand.

The Asian market (inc china) is a massive one, and has numerous huge brand competitors for us to compete against. Though the drop in 8.3% of growth looks bleak, the overall sale of £598million makes it still a lucrative investment. Strategically we are lucky to have a signed our TATA agreement, meaning we are able to increase the number of stores open in the continent by 70% (500

more on the brand building, and focusing on how we can approach the cultural consumer buying habits. Looking back over 2013 we have learnt many valuable lessons on the ever changing markets globally. I believe 2013 was successful year, though I do address the facts that there were more problems than anticipated. But I reputation building becoming ‘back on track’ I can soundly say that Tesco still remains to be an important part of UK cultures retail habits. And with modernisation of the brand through expansion and new expansion planning. We are determined to become a better company for our customers and our shareholder.

Europe Results - Segmented Results

Laurie Mcllwee in Europe markets, although they still appear to be an attractive investment to Tesco. Greece is still struggling from the impacts on their economy in 2010 (decreased by 25%). Greece is expected to reach a 175% GDP by the end of the year. Though they are being helped by strategic planning from government, on low interest rates, and interest deferral. As well as this, Italy’s debt is looking to have increased to 131% GDP. We can make an educated judgement that the market straight away. Though by ‘sticking it out’ we are able to keep our brand name in the market, and therefore be a big


Tesco PLC Corporate Communication Portfolio

Memo – James Marshall, Tesco’s Cooking Ingredients Buying Manager

Chief Executive Report

20th November 2013

Chairman’s Statement

Supplier Relations - Memo

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how we have worked closely with our suppliers to develop a stronger collaborative relationship across the

change for our suppliers to consider.

to give more prominence to a new product so therefore this policy will ensure the allocation of shelving is carried through a fair procedure. Here at Tesco one of our main priorities is always to consider the ‘voice of the supplier’. Gaining some direct feedback from our supplier organisations and ensuring they are given the support and engagement they

Supplier Relations

Our team felt the need to work closely with our suppliers to create a fair and transparent policy that already in the industry is a common practise among other major retailers whereby directly creating this policy would highlight the rules and guidelines that are needed to create a fair system regarding shelving positioning.

Financial Review

The memo released in October 2013 by James Marshall put in the place the policy for suppliers to access premium shelf positions. This stated that there would be a charge for products to be displayed on eye-level

in December 2013, which created a positive outcome and was a great success. The event outlined the main The event also resulted in contract re-negotiations with a number of suppliers who had withdrawn from trading due to the change in policy highlighting a great success. Overall we believe that this has been a successful communication process with our suppliers and has relationship and ensure that the policy will be carried out correctly throughout all the stores in the UK whereby any further queries or concerns can be considered and resolved to the best of our ability. Many thanks,

Media Relations

James Marshall Cooking Ingredients Buying Manager Stephanie Massie Supplier Relationship Management

Community Relations


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Tesco PLC Corporate Communication Portfolio

20th November 2013 To: Minister of State for Employment Department of Work & Pensions Caxton House Tothill Street London SW1H 9NA

Tesco Stores Ltd, New Tesco House, Delamare Road, Cheshunt, Herts, EN8 9SL Tel: 01992 632222

Dear Ms McVey,

of the year regarding employment issues. Since we are aware of the issues raised by youth and long-term

In an attempt to help reduce un-employability regarding young people, Tesco has launched six regeneration hubs (in Burnley, Stockport, Bradford, Cambourne, Conwy and Falkirk) with the cooperation of the local council and resulted in the creation of 500 new jobs.

candidates more than ever. Lack of experience is one of the reasons leading to the worrisome 21 per cent of unemployed young professionals; this is why Tesco School Outreach was launched. This project has for main goal to break the cycle ‘no job, no experience, no job’. Indeed, the pilot programme in Hertfordshire where is our head new generation. Tesco also created a survey named ‘What matters to you’ within the brand employees, which revealed not only that job satisfaction increased compared to last year, but also that employees feel more supported and perceive the team spirit as improved. Last but not least, we have been supporting the communities we work in for more than ten years by giving the long-term unemployed people. I look forward to hearing your feedback Yours faithfully, Mathilde Trouillet


Tesco PLC Corporate Communication Portfolio

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Chairman’s Statement

Tel: 01992 632222

Dear Mr Paterson,

Financial Review

Nobel House 17 Smith Square London SW1P 3JR

Chief Executive Report

20th November 2013

Tesco Stores Ltd, New Tesco House, Delamare Road, Cheshunt, Herts, EN8 9SL

year regarding environment and food waste issues. Indeed, we took in consideration the ambitions to cut down the shameful amount of food waste of UK per year and to sharply reduce the UK footprint, as the country is part of the EU Environment Action Programme 2020.

space. Secondly, according to the country engagement to comply with EU Environment Action Programme 2020, we rallied to the cause by engaging to reduce our distribution by 25 per cent and emissions of the product in our supply chain by 30 per cent by 2020.

Supplier Relations

2013 has been a year or commitment for Tesco in terms of developing environmental friendly regulations. In January, we launched a campaign aimed at raising awareness of the need to reduce Refrigeration Emissions. It

Thirdly, as water usage has increased at twice the rate of population growth over the last century, it is a matter for us to measure the amount of water and we are working to reduce it in our direct operations, although reducing the amount of water we use across our supply chain is still a main priority.

the government aim is to make people halving their environmental footprint by 2020. Finally, to be able to minimise waste in our own operations and reduce food waste across our stores, we have implemented some regulations. We are reducing to-clear foods that are close to expiry date in store. We engaged

I look forward to reading your comments about our actions, Yours faithfully,

Media Relations

FareShare, in order to serve 7 million meals each year. Bakery and meat waste are sent to be transformed into animal feed for livestock and cooking oil and chicken fat are converted into biodiesel. If none of these options are possible, food waste are incinerated with the aim to produce energy.

Mathilde Trouillet Community Relations


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Tesco PLC Corporate Communication Portfolio

Media Relations - News Release

20th November 2013

Tesco Launches Enhanced Loyalty Scheme, Due to Failures in Clubcard Boost. - Customers have been experiencing problems with Boost programme, when trying to spend online. problems. Tesco’s Christmas Clubcard Boost launched 3 weeks ago, but in the run up to Christmas, some of our customers are encountering problems when trying to use the scheme online. Tesco’s Christmas Clubcard Boost is a promotion linked to the Clubcard loyalty scheme, which allows customers to turn £5 worth of Clubcard vouchers into a £10 Boost Token.

was happening to a number of our customers, it became apparent that the problem is to do with our exchange website. Katie Mcquaid, Tesco Clubcard Director, said “The Tesco Clubcard Boost is run every year, as an extra ‘thank you’ to our customers, it is unfortunate circumstances that in the run up to Christmas some of our customers have experienced problems when exchanging online. As soon as problems started to arise, I launched an investigation, and as a result of the conclusion, have

-ENDNotes to Editors - The Boost Sheme is still running as planned from 28th October until 20th December, - The minimum voucher that can be exchanged is £5 - Customers cannot exchange in-store for online tokens, they can only exchange online at tesco.com/xmasboost

Christmas.


Chairman’s Statement

Community Relations - News Letter

13 Tesco PLC Corporate Communication Portfolio

Chief Executive Report Financial Review Supplier Relations

Media Relations

Community Relations


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Tesco PLC Corporate Communication Portfolio



Tesco Corporate Portfolio