Strategy in action
Having given you an overview of the implementation of our strategy over the past year, this section sets out some detailed case studies showing our strategy in action.
Below you can read about the £1 billion commitment we're making to improve the shopping trip in the UK, our exciting innovations online, what we mean by Group skill and scale, our businesses in newer markets, the progress of Tesco Bank over the last three years and our team's extraordinary response to the flooding in Thailand.
UK: Refreshing our stores for customers and staff
The way stores look and feel is an important part of the shopping trip. Customers wanted a warmer, friendlier look and feel, so we have accelerated our Refresh programme to improve the environment in all our stores.
Investing over £200 million of additional capital, we will refresh 430 stores in the coming year, representing about 25% of our UK space. Bringing in a warmer, friendlier look and feel will go hand in hand with our work on quality and range, so that we offer customers great products displayed in an attractive, inviting store environment.
Listening to our staff
Most of our changes are visible to customers but we are making some equally important changes behind the scenes. We ran a programme this year for staff to email or text in comments about what they felt needed to be fixed in their stores. With 40,000 comments received, we've responded by rolling out new and better equipment, like checkout chairs and handheld printers. This has helped deliver the best staff Viewpoint feedback survey results for five years.
The Extra format
Customers are noticing the changes we are making in stores across all of our formats – Extra, Superstores, Metro and Express – but we're also making some changes that particularly affect our larger stores. We're drawing on the great success of our new Extra format in Europe to make sure that our UK Extras continue to meet our customers' changing needs, as they increasingly combine shopping in store and online.
In the last few years, both convenience and online shopping have been growing rapidly. While our existing large stores in the UK perform very well, recognising the current economic climate and the growing importance of online shopping, we are not planning to open many more of the very biggest. Instead, more of our investment is going into refreshing our existing stores. New investment will be channelled into Express stores and our online offer.
Fixtures and fittings, lighting and space
We are refreshing our stores, inside and out, to make them more inviting. Wooden cladding and brighter signage welcome customers into the store. Inside, different areas are being given a more distinctive look and feel, such as wooden fixtures in Bakery, or sleek shelving and lighting in Health & Beauty. Our produce aisles are more spacious, and our counters have less functional, more engaging signage, flat glass fronts and better lighting, to show off our meat, fish, cheese and deli products at their best.
Customers love being able to choose from freshly baked breads and cakes and see our bakers at work in the background. Displaying the goods in baskets, not on standard shelves, also helps to make our bakeries much more appealing.
The UK clothing market, worth £33 billion, is one of the few areas of discretionary spend that continues to grow and is a category where the internet has so far had a limited impact. Our Central European Extras have shown us that Clothing tends to benefit from more space and better lighting on the shop floor, as customers love seeing more of our range. As well as giving Clothing more space in store, we will be improving the ranges and quality we offer to ensure broad appeal.
Click & Collect
As the option of ordering online and picking up in store continues to grow in popularity, our stores are ideal collection points. We will add 700 new collection points for Tesco Direct orders in the next year – customers can already collect from over 770 stores, including 70 Express stores. We will also continue to increase the number of stores with collection points for grocery, as well as trialling convenient joint collection points.
The services we offer in store – like an optician, pharmacy, phone shop or customer restaurant – all help customers to get more out of their everyday shopping trip. We ended the year with over 180 opticians and are planning to increase the number of our phone shops to over 260 in the coming year.