A new strategy for Tesco?

Jay Rayner published an excellent interview with Philip Clarke of Tesco recently (click here to view). This interest in being interviewed is a significant change from Tesco’s historical approach to communications through the media. And, incidentally, a change that they flagged in their unprecedented apology over the Horsemeat scandal. After a few days of remaining quiet on the subject Tesco ran full page adverts across all of the main newspapers and through the social media networks. This was followed by the presentation in February to the farming industry during which they declared their intent to make a significant change to their sourcing approach. Emphasising instead their relationships with the UK farming industry rather than emphasising the price of the commodity alone.

At the time Philip Kendall of the NFU described this as a paradigm shift. Not a position I agreed with and I made this clear when we both interviewed on BBC Radio 4‘s Today programme about it. For a paradigm to have shifted the NFU members would need to have addressed the challenges and the opportunities of the changes in the marketplace themselves. There is as yet no sign that they will do this.

Tesco however are clearly putting their comittment behind a new business strategy; and one which they intend to execute with the elegance of focus that they applied to their previous approach. Tesco have recognised the significant changes in the agricultural and food supply chain business environments world-wide. They aspire to be well placed to exploit the outcomes of increased investment into the technology operating within that supply chain. They have listened to their Customers and to their surprise the Customers were not completely impressed. They are signalling clearly and consistently their change in direction.

During the early stages of the Horsemeat scandal I had the opportunity to informally discuss the impact of the change of leadership from Terry Learhy to Philip Clarke. Our discussion highlighted three reasons that I feel Tesco will continue to succeed. One, the quality and comittment of their senior staff. new websites Two, under Mr Clarke the senior leadership teams now share a common forum for discussion. The false silos between business units (store formats) have been removed ensuring visibility across the company at senior level. The impact of this potential for internal collaboration could be seen in their approach to handling the Horsemeat scandal. Three, within the last few years they have acquired ownership of the firm responsible for aggregating customer data. They are in the very early stages of  exploiting the potential of this.

What is not yet clear is how they will explicitly deliver this strategy and the impact it will have upon the wider food supply chain.

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Horsemeat scandal – the real opportunity for British Food & Farming

 

The Today Programme called me early last Wednesday. They wanted to know what I thought about Philip Clarke’s announcement that from July all fresh chicken would be sourced from within the UK.

The discussion included Peter Kendall of the  NFU and I reiterated my earlier comments that extensive supermarket food supply chains are unavoidable in some cases.  Particularly in the case of Beef. It will take three years before the UK could be completely self-sufficient on Beef production. A point reiterated on BBC’s The One Show where they looked at the feasibility of all the main meat varieties being home produced as Tesco were suggesting.

I find the NFU and media emphasis on Buy British to be a seriously flawed position. Mecocksoworless We have world-class production standards and levels of innovation across the board, from genetics and husbandry through to product development. The future for British Food and Farming is in exports; both of our products and our expertise.

Of course if you have a farm shop or you are a Butcher it makes sense to be opportunistic about the scandal and seek to convert a few customers. However that is a short term-tactic. It creates a lot of media noise but it will not impact on the habits of the vast majority of consumers. They simply don’t have ready access to the butchers and farm shops that the picture of buy local promotes.  Moreover it is not a strategy to build a thriving industry.

If the NFU really wanted to support their membership they should be thinking in terms of extending the reach of our product distribution beyond these shores proactively and for the long-term. We need to extend the reach of our business relationships not focus our energies on the crumbs of business from the supermarket table.

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