Tesco
Dear London School of Economics. My name is Jacob Breinholm and I am the PR manager for Tesco. I have been working for Tesco for four years now, and it have been four good years. On behalf of Tesco, I am here to tell you about our firm and our problems after the fall in the shares back in January 2012.
In this speech, you will hear about the grocery store, Tesco. I will tell you about the downturn we have had in 2012, the problems we had, and which efforts we used to get back on track.
The 12 months in 2012 have been terrible for Tesco. We have experienced a huge fall in our economics. Previously it went really well for Tesco, and we had a higher sale than we have today. Investors once called Tesco a darling of the U.K. stock market, until January where everything went down for us. The shares has fallen by 20 percent. After this fall in market shares, my boss the longstanding chief Terry Leahy who have been CEO for Tesco for 14 years, have just gone off. The new CEO for Tesco is Philip Clarke, and it was not a nice sight he met the first couple of weeks. Experts have said that Mr. Clarke need to reconnect with customers and change the business’ culture.
We did also launch the Fresh and Easy at the worst time possible, just one year into the financial crisis in 2008. We did also make some obvious mistakes though. We had no coffee in the store, as the first thing in the morning, there was no frozen food as Americans like and so on. That is why investors have called 182 Fresh & Easy stores to fail. The U.S. stores Fresh and Easy did also fail to take off and we did not catch that many customers. Still, we have some big international investors such as Warren G, BlackRock and the Singaporean Government. As a matter of fact, one in every seven pounds spend in UK are spend in one of our stores but we still needed to improve the business.
Many customers have criticized us for letting our standards slip, missing staff, looking to industrial, having a lack of warmth and having to many empty shelves. From an investors standpoint it led us to the first profit warnings in 20 years, and all this has led to our second worst downturn. My coworker Laurie Mcilwee our CFE said, “Tesco will now have a lower growth, but importantly a lower investment.” We have also invested some money, and we have been growing in the right direction again. We have invested one billion to revive the sales, and we have done it by painting the shops in warmer colors and giving the shop a warmer ambiance. We will get 22,000 new employees, and we will pump 150 million pounds into our online development.
We have also improved our shops, for example the new deli with better and fresher food, and the bakery with higher quality products and fresh baked bread every day. We have also shifted our old private label products out with some new ones. We gave them a new and warmer color, we made it in a better quality, we gave them better ingredients and we shifted the name from Value Label to Everyday value.
Right now, we are upgrading and improving our stores and our business, but we do still have many other things to think about. Tesco will soon be back on track, and we will be ready to invest even more in upgrades, and developing our business to other areas.
Tesco has changed, and we are still changing. We are changing in the way the consumers are behaving, and we are looking in the way the consumers adopt their smartphones. “By year 2020, everybody in the world who are under 21 are born in the era of the internet, and they will use the internet to everything. The smartphone has changed the way people live, and it will change the way people shop,” said Mr. Clarke in an interview. Tesco will reflect that and we will make us ready for the digital era, by having more investments in the digital areas and fewer investments in bricks and mortar.
We came up with a six-point plan for improving their businesses here in U.K. The first point is service and staff. People have been asking for more and better staff, so we have hired 8,000 further new colleagues and made them service minded. The second point is stores and formats. We have improved our stores by giving them a new look and giving them an ambiance. The third point is price and value. We have made sure that people get value for money by improving the products, and keeping them at low prices. The fourth point is range and quality. We have started to focus on the quality of the product and making it better. The fifth point is brand and marketing. We have made a new brand that are better than the old one. Last, the sixth point is making sure that the clicks and bricks business comes together nicely.
We have started on the six-point plan and we have started to focus on the products being on the shelves when the customers need the, at the right price and with the right quality. We have done almost everything on the plan, and we are still working hard on the last point on the plan to be finished.
Right now, we are preparing for the impact of the smartphone, and we have made a Tesco app where you can see and buy all our products. We also have the click and collect service in our app, which means you can buy or reserve a product on the app and collect the item in the store the next day.
After our terrible 12 months, we have really improved ourselves and we are on the right track. Our international profits rose by 18 percent and we are now close to what it was before the downturn. We have had internet sales for two and a half million pounds, and we are the leading grocery home shopping retailer in the U.K., if not, in the world. We are also this year, going to double our investments in creating digital assets, both home and overseas.
As you, all can see everything have been like a rollercoaster for us. We had a good 2011, and then everything went down. Now we have improved ourselves by using different plans and strategies and we are ready to come back stronger than before. We do still have some things we need to improve, and we will.
I hope you enjoyed my speech. I will be sitting at the table in the back. If you have any questions, I will gladly answer them. Thank you for today.