Tesco unveils 'Fit for Growth' approach to future success

An audience of 1,200 gathered at London’s Tobacco Dock on 17 May to hear from Tesco Group chief executive, Ken Murphy, chief customer officer, Alessandra Bellini, and chief product officer, Ashwin Prasad.

The leadership team shared their reflections on Tesco’s recent performance, their views on the current state of the market, and how and where success will be found in the coming years.

The future lies in ensuring Tesco is ‘Fit for Growth’

After a year that saw overall sales grow 5.3% Tesco’s four strategic priorities of ‘Magnetic value for customers’, ‘I love my Tesco Clubcard’, ‘Easily the most convenient’, and ‘Save to invest’ remain unchanged.

However, with operating profits down 7%, Tesco revealed a new ‘Fit for Growth’ mindset comprised of three workstreams, which it aims to employ to ensure future success. Tesco’s call to action both to its own teams as well as suppliers and manufacturers was to be bold, collaborative, work at pace, and, when the time comes, to bring their expertise and big ideas.

Range resets to provide shoppers with brilliant choices and availability

Resetting product ranges was highlighted as the most important area of Tesco’s agenda for 2023. The need to deliver simpler ranges that would provide shoppers with brilliant choices and guarantee product availability is seen as key.

With no reduction target, suppliers were instead urged to face into the reset by bringing the best of their category management capabilities on tiering, price structures and best-in-class merchandising.

End-to-end simplification

Simplification, along with availability, was identified as a bedrock that all other discussions would be reliant on. Already an aspect being incorporated into workstreams, Tesco acknowledged there was more to do here. A key aim is to get supply chains back to operating at their pre-covid best.

The effect of this will be seen in many areas; from guaranteeing products are delivered to stores to allow the most efficient transfer of stock to shelves, fit-for-purpose shelf-ready packaging, and simplifying and reducing product ranges.

Elevate online

Online forms the final aspect of ‘Fit for Growth’. With sales now 50% higher than they were in 2015 Tesco views online as a platform rather than a channel. Despite this long-term growth, online sales in the market have dropped, leading Tesco to ask suppliers for their support to ensure mutual profitability and sustainability.

Digital media and increased personalisation of offer

The increasing importance of digital media and providing more personalised offers to shoppers was emphasised throughout the day. Tesco sees this as an area open to new and exciting possibilities now that technology is in a place to deliver on the promise of the data captured by Clubcard and its market-leading share of online sales.

Mention was made several times during the day that digital media messaging must be relevant, timely, offer shoppers something meaningful and engage with shoppers in their preferred digital medium.?

The Clubcard app will be key to success here. Already with 11m app users, Tesco acknowledged transitioning more of the 21m households with Clubcards from cards to the app was an important step towards growing digital media opportunities.

Brands were encouraged to make use of Tesco’s Media and Insight platform for growth. Targeting the right customers and engaging them with relevant and personalised content.