Journey into Tescoland

Pickers of mangetout in Africa think the man who flies in to inspect quality is the king of a far country called Tesco. This is not completely daft. It may only be a supermarket chain, but Tesco has put shopping on the Internet, is into publishing and banking, has exploding profits, and is slaughtering its main rival, Sainsbury's. So what's the secret?
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Indy Lifestyle Online
When you talk to someone who works for a successful company, there is often a moment when you realise the company is his or her life, that the body corporate has taken over. It does not happen with mediocre firms.

With Tony Reed that moment comes when he says he would do anything to make a customer happy: "If someone really needed something we did not have, I would pick it up at a colleague's shop and deliver it to them myself." If the idea of Reed, who manages of one of Tesco's biggest stores, coming round in his Mercedes with your groceries, arouses a cynical laugh about retailing hype, think again. His concern is genuine and it runs deep.

He explains that, at any one time, there are around 200 items out of stock at the superstore he runs at Cheshunt, Hertfordshire, just down the road from headquarters. Given that his shelves contain 25,000 different products, most store managers would settle for that. Not Reed. He is beside himself at the thought of it.

Spending time with Reed is to enter another world. He lives up the road in Broxbourne, he is married with two small children, he supports Chelsea. But his whole life is Tesco. Sunday is a day off but he likes to pop in to see how things are going.

He reels off the different types of shopping trolley in the store: "normal, pensioner, baby and toddler, twin baby, twin toddler". Details that would be lost on the rest of us are emphasised: "The OAP trolley is not so deep and it has a clipboard so they can keep their coupons and lists together. We started with 12 but they are so popular that they now make up 15 to 20 per cent of our fleet."

A fleet! Reed sees nothing wrong with the idea of a line of shopping trolleys as a fleet. He says with pride that there are 3,000 of them, all neatly moored in bays around the car-park.

This is managing, Tesco-style, which means nothing is left to chance, where everyone is catered for. It is a strategy that has seen Tesco rise from dowdy, pile 'em high, sell 'em cheap chain to the top supermarket operator. The company is on a roll: opening giant Tesco Plus stores out of town, the smaller Tesco Metro in the high street and Tesco Express on garage forecourts. Launching 24-hour shopping; signing up millions to its loyalty cards; producing glossy magazines, like Tesco Baby Club, aimed at pregnant women and Tesco Recipe Collection, featuring Padstow's master chef Rick Stein.

Much credit for this formidable achievement belongs to Lord MacLaurin, the chairman who retires this summer to try to work the same magic on English cricket. If county cricket administrators exhibit one scintilla of Tony Reed's enthusiasm, the game has found its saviour.

Reed's store is at the Brookfield Centre, an out-of-town development north of Cheshunt. His neighbour is Marks & Spencer, and when he has an idle moment, he slips into M & S to see what's new in ready meals, and how the store is laid out.

"Retail is detail," he says, literally within seconds of our meeting. "If you take your eye off the ball for five minutes something will go wrong." It is like a mantra he repeats at the checkouts, in the staff canteen, in the toilets, on the journey home: "Retail is detail, retail is detail, detail, detail..."

Reed joined Tesco 18 years ago, before the MacLaurin revolution. For the last six years he has been a manager and - since January - in charge of Brookfield, the Tesco with the highest turnover in Britain. In an average week 45,000 people pass through his doors. If they spent an average of pounds 10, turnover would be pounds 23m a year. It is probably more than that.

At 10am on a Wednesday morning, most of his 45 tills - "including four express and nine wide aisle" - are busy. The store is 65,000 sq ft, one of the biggest in the country. It is open from 8am to 10pm Monday to Saturday and 10am to 4pm on Sunday. Trials start this week in four Tesco stores to test 24-hour trading.

Reed's opinion is predictable: if the customers want it, they will get it. The philosophy of MacLaurin or "Mac" or "I M" as he is known to his staff, has been built upon giving customers what they want, plus some more. Sainsbury was top dog, with a reputation for quality and choice. But Sainsbury's Achilles heel was its "upmarket" reputation. MacLaurin's trick was to offer quality and choice while appearing quite classless.

MacLaurin's reforms coincided with a sea change in distribution methods. Lorries became available that could carry fresh, chilled and frozen food at one go. New checkout technology automatically re-ordered items from the warehouse as soon as they were sold.

Instead of delivering to individual stores, suppliers were told to send lorries to new distribution centres around the country. Lorry movements in and out of Reed's store were cut from 500 a week to 170. Warehouse space was freed and Brookfield expanded from 40,000 sq ft to 65,000. Down went the barriers at the entrance and in came new lighting and colour schemes.

The key to Tesco's success, says Reed, is allowing local managers and staff to have their heads. Tesco was one of the first organisations to use focus groups, to encourage select bands of consumers to talk openly about their stores. (This idea, copied by Tony Blair, provided the impetus for the rebranding of his party as New Labour.)

Each store has a "customer panel" which meets in a local hotel. Reed goes, notes down what they say and if he can, puts their suggestions into practice. Some common themes emerge. Tesco had the bright idea of installing high-tech revolving doors at its entrances. When they were consulted, customers said they hated them. The doors are no more. Customers said they wanted in-store pharmacies. More than 100 branches now have them.

Customers with children said they liked Tesco for some items but went to the cheaper chains for staples such as baked beans and cereals. In came the "Value" economy range, with no fancy packaging and labelling but low prices. A full-sized tin of Value baked beans sells for 12p. Reed sells 7,000 a week - many to people who might not ordinarily have used Tesco.

No stone was unturned. Customers wanted books; they got books. Customers requested better quality fruit and vegetables all the year round, same as M&S. Tesco made sure they received them. "We have no seasonality at all," says Reed, "when parsnips stop in this country we fly them in from Australia."

Likewise, as was shown in the BBC2 Modern Times series last week, mangetout is flown in from Zimbabwe. The Tesco staff on the programme, one of whom was hailed as "king" of a faraway country called Tesco by the pickers, exhibited the same passion for their company as Reed. And for making money. The programme claimed that for every 150 grams of mangetout Tesco sells in Britain for 99p, the farmer gets 45p and the pickers receive 1p. It would be wrong to suppose that increased profit does not dominate Reed's every move.

At The back of the store is a "consumer advice centre" - Brookfield is one of five stores to have such a facility - where advice on products and recipes is freely given. A fully equipped kitchen, the centre is also where new products are tested on customers and cookery demonstrations are held. They are so popular that there is a waiting list. Last week more than 40 people watched a demonstration of Chinese cooking, using only Tesco ingredients, of course.

Customers were going to M&S for their birthday cakes. Some may still do so. But now many stick with Reed. His store has gone from selling two or three kinds two years ago, to 40. If you want a birthday cake in the colours of your favourite Premier League team you can have it.

A key element in any Tesco superstore is the "centre aisle". This aisle, running the full width of the store, says Reed, "is where I can really turn it on". It is where the hard sell takes place, where managers put their "unbeatable offers". It is the main thoroughfare and is lined with posters declaring "three for two" and "two for one" promotions.

At the tills, another MacLaurin initiative: no queues. Customers said they hated queueing more than anything about their trip to the supermarket. "We are not allowed to have queues," says Reed. Every checkout has a sign saying "One in front service", meaning there should just be one person being served and another waiting.

Extra cashiers were hired. If they are not serving anyone they are encouraged to leave their tills and help customers pack. At M&S, there are noticeably more supervisor-types patrolling, keeping the cashiers in check. "We have more bums on seats," says Reed.

Neither, at Tesco, are they cashiers. "We call them customer assistants not cashiers because they have such a massive role. They are responsible for scanning, packing, taking customers to their car and helping them unload, and getting feed-back. They can even accompany a customer around the shop, if that is what the customer wants - we will do anything to make the shopping trip more convenient."

Posters and placards advertise Tesco's Clubcard scheme, the first loyalty card to be launched by a British supermarket chain. Customers receive points which can then be turned into money-off vouchers every time they spend pounds 5 at Tesco. More than nine million people now carry them in their wallets and purses. In February 1995, when they started, David Sainsbury, chief executive of Tesco's main rival, derided them as "electronic Green Shield stamps".

Within seven months, Tesco had edged ahead of its rival for the first time. In June 1996, Sainsbury swallowed its boss's words and did a U-turn, issuing its own Reward card, which now has eight million holders.

Tesco intends to capitalise on the Clubcard's success by joining forces with Royal Bank of Scotland to offer insurance, loans, life assurance and unit trusts. Reed, as ever, cannot wait. Supermarkets took the pain out of buying petrol; now they will make it easy to buy finance.

What a pity, he moans, he cannot sell clothes. "I would put clothing in; customers are asking for it." He looks wistfully towards the back of the store. "I could convert more backroom space into selling space..." Nothing, you feel, is safe from his gaze, not the staff canteen, not the toilets, not even his own office. Anything to make the customer happy.

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