Tesco sees produce as key to keeping top spot

HOW IMPORTANT IS PRODUCE TO TESCO?

Produce is one of our biggest categories and it’s very important from that perspective alone. It’s in the high 90s in terms of percentage penetration, so out of our 14 million customers or so, 90 per cent will buy produce.

For that reason, in terms of the quality and freshness we provide to our customers, it’s a key department for our business.

SO WHERE DOES IT SIT WITHIN THE BUSINESS?

It occupies a very important strategic position. You need to get it right to satisfy your customers.

I think we’re getting a lot more right than we’re getting wrong. Can we improve? I think yes, you can always improve. And that’s probably where we’ve succeeded the most. This continuous improvement in terms of product quality and choice has seen the business grow and double over time. It’s a great area to work in.

HOW DO YOU STAY SUCCESSFUL?

It comes down to some basic and small things - first is quality, get it wrong and you can really lose customers. A good example of that is grapes. We source it from numerous countries and maintaining that quality is part of what gives you the sales - if you’ve got great tasting products consumers come back. If you don’t then it may be a number of weeks before they return. Quality is and always will be number one on the agenda.

Service is also vital, we shift a huge amount of produce. There’s always room for improvement, there’s always things we can do to get better. We’re constantly looking at the fixture and how we present the products. We made changes two to three years ago to get more produce on display and improve availability on shelf.

HOW DO YOU MONITOR YOUR PERFORMANCE?

We get a marvellous measure of our service levels from the dotcom business, we can easily see orders that we do fulfil and those that we do not and that can allow us to focus on areas where we’re not doing things as well as we’d like.

Clubcard helps too, it doesn’t necessarily give you any answers, but it certainly helps you ask the right questions.

HOW IS TESCO MAINTAINING ITS LOW PRICES?

On price, we always look to improve the value for our customers, and partly that’s linked to getting better at doing things. The less you handle a product, the better the quality and the cheaper it becomes.

The days when products were picked, put onto a truck and taken to a packhouse etc are now largely gone in the bigger volume areas. Iceberg is picked, stripped and put into a Tesco bag in the field, put into green crates and straight into the chiller and that’s an exceptionally efficient and high quality way to manage the product. We’re continuing to do that with more products and more producers,

There’s never any strict rule as to how we get there. We re-invest those efficiencies into selling more to customers and that’s been proven by the growth we’ve had in produce.

We’ve outperformed the market but there are always opportunities to get better at doing things and that’s about efficiency.

HOW IS TESCO ADDRESSING THE HEALTHY EATING ISSUE?

Consumers are trying to live more healthily and there’s been a lot of focus on nutritional eating and diet.

In terms of Tesco, we’ve changed our packaging, and we’re putting much clearer nutritional information on products. We also want to put some of the health benefits on some of the produce. We recently launched the wholefoods range which clearly states the benefits of the produce on its packaging, and that’s something we’d like to do more of.

At the moment we don’t have 5 A DAY on pack. What we’re doing is getting the nutritional information on the packs, that’s the key focus for us, increasing people’s awareness in that area.

We’re supporting the Eat in Colour campaign, but there’s a lot of work to be done there on what form that takes. I see that as an opportunity to get a more consistent message across.

WHAT OTHER AREAS ARE INTERESTING YOU?

Seasonality is a great opportunity. It’s still there; look at things like English strawberries at the start of the summer, for instance. But perhaps we need to be celebrating seasonality more.

Perhaps we’re not telling customers enough about the products in season, whether it’s asparagus, strawberries or products from other places.

People are becoming much more interested and that’s making fruit and veg much more interesting and more exciting to customers, and more relevant.

WHAT IS TESCO’S APPROACH TO CONVENIENCE IN PRODUCE?

We have prepared stuff, salads, fruit and veg, and its brought people back into produce. Culinary skills aren’t increasing, giving them produce that is really easy and good for them has to be a positive step.

We relaunched our prepared fruit range and have seen fabulous growth in that area.

Prepared products like salad are good as they are giving people different mixes of different products that they probably wouldn’t want to do themselves.

Some people still don’t know how to prepare a mango or pineapple and to be able to do that for them is a great step forward, and it’s still just as good for them. It also gives them the opportunity to try a product that they wouldn’t necessarily have purchased, particularly on salads, as we’re giving them a mix they wouldn’t have bought whole. For customers to buy five whole lettuces is quite a cost and quite a challenge. The prepared bags are convenient and add a lot of value.

I think convenience will continue to grow and is still a great opportunity, particularly with more people coming into the produce sector.

IS PRODUCE DIFFICULT TO DELIVER IN YOUR EXPRESS STORE?

It is quite a challenge trying to provide consumers with everything they want in such a small space. You have to think about the range and pack sizes. Most customers walk to an Express store, so there’s no point putting in a 10kg bag of potatoes. We have to be smart in terms of putting in the right range and offer.

Produce is significant in the development of the Express offer and I think we get it right a lot of the time, but it’s still quite new to us and we can certainly get a lot better. We’ve got quite a good offer, but it can be improved.

HOW IS YOUR RELATIONSHIP WITH SUPPLIERS?

I think overall we’ve got a good relationship with our suppliers. I think we’re quite hard, but also quite fair at the same time.

The majority of our suppliers have been with us for at least 10 years, certainly in produce. In many cases they’ve been here much longer than that and I think they’re big supporters of the stuff we do.