Tesco UK and ROI CEO Matt Davies' speech to Retail Week Live 2016
16 March 2016
A transcript of Tesco UK and ROI CEO, Matt Davies' speech to Retail Week Live 2016
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Good morning everyone, I’m delighted to be here.
Let me start by saying something which I hope is fairly obvious and you will have picked up from the intro.…I’m not Dave Lewis. Those of you have come here today expecting Dave have instead got a slightly more northern, and certainly a lot taller, variation…I’ll do my best to make up for it by saying a series of things that Dave would never be able to get away with if he was here.
Now this is my first official speech as CEO of Tesco’s UK and Ireland business and it’s great to be able to debutant at Retail Week. I have been a huge fan of Retail Week for many years and how it reports on our industry, in a positive constructive manner.
It’s been almost a year since I joined Tesco, from what back then I considered to be a fairly large retailer – Halfords.
I can’t resist a quick advert for Halfords: it’s is an amazing business, and I’m proud of the work we did during my time there – and it’s great to see, as for Pets at Home, the business go from strength to strength.
But what’s struck me most since joining Tesco is that by any standard, this is a colossus of an organization. And it’s not just a big business – it’s also box office news.
Before I joined Tesco I was fascinated – like many of you, and much of the nation – to watch the story of Tesco unfold. Every day, it seemed, there was another headline – very few positive ones.
So having watched all of that, you might well wonder whether I hesitated at the opportunity to join Tesco when it was put in front of me.
In fact, it’s probably the question above every other that I’ve been asked most over the last year – why did I leave Halfords to join Tesco?
The answer is actually really simple. From the moment I got the call asking if I was interested in coming to Tesco, I was dead set on joining.
From a business perspective, I really do believe in the scale of the opportunity that lies ahead for Tesco and the success which can flow from rebuilding trust with our colleagues, customers and the Nation.
But also, more fundamentally, I was fascinated by the main, overriding challenge Tesco faces. It’s a challenge that doesn’t just involve me, or Dave or the Executive Committee. It involves every single Tesco colleague – and it is this:
How do we turn Tesco from a company that runs shops, to a company that serves people?
My point is that for recent years, this business – and in many ways, our whole industry – had been so focused on operational excellence that we’d lost sight of the most important thing in retailing: serving people.
And when I say “serving people”, I’m talking about service in its fullest meaning – the question of whether you as a business can be truly helpful to your shoppers.
It’s about whether you can offer everything customers want and need in a way that makes their lives that little bit easier and better.
That means products they love. It means prices that are customer-focused. It means taking small actions at every stage of the shopping trip to truly engage and connect with your customers, and empowering your colleagues to do that day in, day out and then celebrating success.
Talking about Tesco colleagues, I was delighted earlier this morning to meet a group of six Tesco colleagues who have come down from Macclesfield for this event. Nik Kalka emailed Dave and said – I’m the lead night manager in Macclesfield, and along with some colleagues, we’re in Year 1 of the Tesco Retail Management Degree at Manchester Metropolitan University. Can we come to London to learn? Of course, we said – and I am delighted that they are here today.
So there’s a huge amount to be positive about and I’ve been amazed at the expertise, dedication and commitment I’ve seen within Tesco. But my point is it’s not enough to have the best technicians, the best logistics, or the best planners. We have to create a movement to excite our customers. Surprise our customers. To make our customers feel special.
This is what tens of thousands of people across our business are now obsessing about – how can Tesco fulfil its purpose and serve Britain’s shoppers a little better every day? And that’s what I want to talk about today.
Now the reality is there’s no single answer to this question. There’s no quick fix for any business that wants to become a world class service organisation. But there are some big principles which should run through everything. And for me, the most important are these:
- Really listening to customers and to all your colleagues;
- Creating a culture of continuous helpfulness;
- And using your operational expertise to offer truly personal, helpful service – at scale.
Listening. Culture. Offering great service at scale. Let’s start with the foundation of everything: listening.
Why don’t we take a moment to hear from some customers…Can you please play the video?
Now I love this video for two reasons.
First, it reveals a great truth about Tesco. One of the biggest assets we have is that our colleagues are so reflective of the United Kingdom. Think about it: 300,000 Tesco colleagues – colleagues from every corner of the country and every kind of background.
That means in so many ways we are Britain – we know what’s going on – and so if we get better at listening to our colleagues, we’ll get better at serving our customers too.
The second reason why I love this film is it holds a clue to the kind of service our customers are looking for because there are three big themes affecting Britain’s shoppers today.
First, people are time poor – I know it is a little clichéd, but in fact, a few months ago we asked customers to pick one word to describe their lives – and out of all the words in the English language, the clear winner was “busy”.
The second big change is that households are getting older – and also smaller. Now almost half of all grocery spend is by over 45s with no dependent children. What’s more, right now, in the UK some 44% of meals are eaten alone.
The third big change is in some ways the most important. Customers today just want straightforward value for money. They don’t want to have to take a calculator round with them to figure out if they’re getting a fair deal.
Now that has huge implications for the way we price and promote products. I think in the past, it’s just been a race to offer the best short-term deals and promotions. But what we really need to do is to break out of that cycle and give customers value for money that is consistently helpful day in, day out. And that means offering prices that are truly simple and stable, as well as low.
Some of the biggest changes we’ve made while I’ve been at Tesco have been about changing the way we think about price in response to what customers want.
You may have seen the focus we’ve put on our Brand Guarantee – we’re really proud of it, because it meant we’re the only retailer to offer instant matching and money off at the till.
But we’ve also been making a massive number of small, everyday changes to the way we price products and offer value for money.
Every week, through our review of product ranges, we’ve been making shifts to simple, stable, more consistent lower prices – with hundreds of products moved to everyday low prices, a massive increase in price stability, and across the board, we’ve been shifting away from high-low to mid-low promotions. And this is not a short-term initiative – this is a fundamental change in how we do business.
My point is we’ve got to think about price through the lens of great service and continually listen and respond to our customers.
That leads me to the second big principle: creating a culture of genuine helpfulness right across our organization.
This video is great because it tells you that there are no silver bullets. We will not wake up one morning and our job will be done. No, it’s through 2 million little helps every week, and by serving Britain’s shoppers a little better every day. That’s our route to success. Empowering all our colleagues across Tesco globally.
The question is how can we do it? How can we help every colleague be empowered and supported to offer that kind of every day, great service?
Our new purpose is right at the heart of this. It’s a guide and filter on all our actions and how we behave. But we also need to help every single colleague understand what role they – in particular – can play.
That starts of course with our store colleagues. They have such an important role to play because more than anyone they are supporting our customers by the minute across our stores and are best placed to make them feel special.
I think of our colleagues as an army of advocates for Tesco. We have to engage and inspire our army to champion Tesco because they feel proud of the business they work for.
Then there’s our support office – the engine room of the business – if the engine room is purring anything we do in store will be necessary, relevant and will support us getting better every day.
Our store management also has to act as the most incredible accelerator of performance by using recognition to engage our people, retain talent and really supercharge performance.
I’m talking about real recognition that happens by the minute, that flows from people’s personalities and core values and beliefs, that really build trust as opposed to false corporate recognition that revolves around process and adds up to nothing.
So that’s the challenge we have ahead of us – creating a culture of service and helpfulness right across Tesco.
And then the third big opportunity for us is to build on that culture and combine it with our operational expertise to offer outstanding service, at scale.
One of my most outstanding memories of the past nine months has been our company’s reaction to the floods in the North of England. And just before I show another video, let me share a few details.
Overnight one week in December our Carlisle store was flooded, the town was also flooded and so were many, many homes. It was incredibly sad – but then something remarkable happened. In less than seven days the team at Tesco has built an entirely new temporary store.
They didn’t ask permission, they didn’t submit a budget proposal – they simply knew that they want to help a community in need, and the way they knew how to do it was to build a new store. Quickly.
So along with two million little helps – there are some extremely big helps, that – at times – only Tesco is truly capable of, and that is truly amazing.
So, I’ve talked about the importance of service, about helping Britain’s shoppers a little better every day, and the journey we are on.
We are fixing Tesco under the hood – brilliant retail basics, but we are also building a groundswell around little helps that will define us going forward and that heritage is firmly sewn in our past and established by Tesco greats like Lord MacLaurin and Terry Leahy.
That momentum of two million helps a week, is what will differentiate us.
So, what else can I share…? Yes, one more thing. In fact, I want to go back to the beginning and throw back the question I asked myself last year: if you love retail, and love serving customers, and love working on big stuff that really matters – have you thought about joining Tesco?
I say that because I really do believe we’re on the cusp of doing something special at Tesco. You saw the results we shared at Christmas trading. We’re back in like-for-like sales growth now for the first time in 4 years.
Even more interesting is what lies behind them – the feedback we’re getting from customers on the shop floor. On every key measure of great service, customers are more positive about Tesco than they’ve been for years.
That’s a great foundation for us to build for the future, and I really would ask you to consider being part of it.
Now I’m not for one second going to say that it will be plain sailing – this is a very competitive industry and there are big shifts and challenges still on the horizon.
But if we obsess by the minute about being a brilliant grocer and serving Britain’s shoppers a little better every day then we will be in a good place and a build a great future.
I really feel our destiny is in our own hands but the next two to three years will be pivotal, and if you feel the same then maybe Tesco could be right for you?