A good neighbour and a 'green' friend: Tesco goes after hearts as well as wallets

Abigail Townsend
Sunday 23 October 2011 08:36

Supermarket behemoth Tesco, the whipping boy of the chattering classes, is hitting back with a charm offensive encompassing everything from renewable energy to a pledge to start listening more.

The chain has become a target for campaigners who accuse it of squeezing suppliers, contributing to "cloned" high streets and leaving small stores unable to compete while its profits and sales soar. Tesco, which has a 30 per cent market share, last month unveiled full-year profits of £2.2bn.

But chief executive Sir Terry Leahy has started a fightback. His first step was unveiling a £100m fund to spend on sustainable environmental technology. This will include looking at in-store lighting powered by wind turbines, and building "green" shops.

And his latest move is a 10-point action plan aimed at turning Tesco into a "better neighbour". Speaking at the Work Foundation think-tank, Sir Terry pledged to halve the average energy used in Tesco buildings by 2010, to make carrier bags bio- degradable and cut the use of bags by a quarter. And from next year, he says local communities will be consulted before new stores are built. He also promised to reduce deliveries to Tesco Express stores to stop disturbing small neighbourhoods and to stock more local produce.

Sir Terry said the plan was not "high-blown rhetoric but solid, practical Tesco changes".

"It's a mixture of necessity and responsibility," said Clive Black, retail analyst at brokers Shore Capital. "I'm sure Tesco would be the first to say it should and could do more."

Tesco will also have witnessed how a dislike of big retailers can escalate. Asda's US parent, Wal-Mart, has long been criticised for its working practices and last Friday a damning film was released. Wal-Mart: The High Cost of Low Price accuses the chain of spying on staff to ensure they don't join unions, paying low wages and crushing smaller stores.

"There's a very slick and powerful lobby against big business [in the UK] and Tesco is absolutely right in seeking to address that," said Richard Hyman, chairman of retail consultancy Verdict.

"One way or another, it's about education. It's about addressing the fact that a lot of people in Britain, if you tell them a business has made a profit of more than £2bn, their natural reaction is to think they must somehow be getting ripped off."

Not everyone is convinced by Tesco's reincarnation. Rival retailers point out that they have been working on similar initiatives for years. J Sainsbury, for example, launched its first "green" store in 1999 and has cut carbon emissions by 20 per cent since 2000. Cynics are also dubious about the timing, with the chain unveiling its new image alongside record profits and the supermarket sector's referral to the Competition Commission.

Mr Black added that many of the moves made economic sense - particularly, given the high oil price, the pledges to cut energy consumption and find alternative sources.

But a Tesco spokesman insisted it was not a "knee jerk" reaction. "They are very real, practical things. It's not grandstanding. We have done these things for many years but now we're driving it a step further.

"If it has the effect of convin- cing critics that what they are saying is wrong, then great, but it's not the reason we're doing it."

And Mr Black argued that the British shopper's apparent dislike of Tesco may have been overplayed. "What is the real public perception? People shop there and they have a choice of where to shop. I would argue that the average woman in Coventry or the average man in Rotherham thinks Tesco is all right."

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