Tesco's Crush Competitors
The British Press of all political persuasions from tabloid to serious reading seem to delight in printing good news stories about Tesco's. At the moment it's all about their phenomenal results in the 8 week period covering December and early January.
Rivals Sainsbury's reported a 0.4 per cent fall over Christmas and it's first loss in its 135 year history while Morrisons, which bought Safeways not so long ago, achieved a mere 0.1 per cent rise in takings. Asda probably fared better but their figures aren't issued separately by parent company Walmart. However, no one expects that they would be anywhere near Tesco's announcement of a growth in same store sales of 7.6%. With petrol included the sales growth is 9.3% with overall group sales up 13 per cent over the period.
What makes the 7.6% same store growth particularly impressive is that it was up against strong comparatives in the previous year when like-for-like sales excluding petrol jumped 7.5%.
And it isn't just food that they are dominating. Tesco's has the fastest growing clothing business in Britain last year and their top performers over the Christmas period were clothing, CDs and electrical products putting pressure on retailers such as Woolworths UK, Marks & Spencer and WH Smith which all reported disappointing results over the same period.
Tesco's now take £1 in every £8 spent in UK shops. They have 29% of the grocery market compared to 26.6% 12 months ago while Asda have 17.1%, Sainsburys 15.9% and Morrisons 12.4%. How have they got this dominant position? In addition to an excellent corporate culture, a primary focus on the customer and an excellent retail offer, their prices (excluding petrol) were down 1.6% on the previous year!
And it's not just in the UK that Tesco is performing well. International sales, which go well beyond Europe to China, Korea and Thailand, rose 16.1 per cent.
Their CEO, 48 year old Sir Terry Leahy, is revered as a corporate saint by the UK business media in the same way as Wesfarmer's Michael Chaney is in Western Australia. He is consistently portrayed as a man who not only gets great results but also does it with the right customer focus and company culture and as a superb retailer rather than a corporate number cruncher.
Mind you, in the next three weeks while I am zig zagging my way around the UK presenting one day workshops for Farm Shops and Farmers Markets, I'm sure I will hear a whole different perspective on Tesco and Sir Terry Leahy.
The revitalisation of country towns and how to counteract the detrimental effect that Tesco, Asda and the big box retailers are having will, I'm sure, be a key topic of discussion. Fortunately, the people that I will be exposed to will be those who are doing something about it in a positive way.
Since recovering from the agricultural challenges of recent years many UK farmers and rural communities are doing a great job of educating people to the benefits of fresh local produce and the farm experience. This is a mixture of produce, retail, tourism and education and the conduit for this is the experience created. If they can get it right, with consistency, there will be important lessons for businesses in many parts of the world.
Sometimes the language used to get the message across doesn't quite capture the emotions in the way that I would like. The English Countryside Agency, which supports the work of the National Farmer's Retail & Markets Association (FARMA), the organisation which has brought me to the UK for this nine venue retail roadshow, promotes the catchcry 'Eat The View'. I prefer Hilary Cochran's catchphrase from Knowes Farm Shop in East Lothian, 'Look at the landscape and lick your lips'.
It's fun being your UK roving reporter. Until next time....
About the author: Jurek Leon is a speaker, trainer and consultant. To subscribe to Jurek's FREE monthly email newsletter go to the Free Articles section of his website: www.terrifictrading.com