Interview: Chris Bush’s plan to turn Tesco into a brand of choice

The weight of responsibility is on Tesco UK managing director Chris Bush. While he has been given the keys to the UK kingdom, that honour comes with high expectations. Last week the UK’s largest retailer reported that UK trading profit fell 8.3% to £2.27bn after its £1bn investment into the business last year. While the grocer said it was pleased with the progress made in its domestic market already, group chief executive Philip Clarke said there is still much more to be done.

The backdrop to the ‘Building a Better Tesco’ plan in the UK is also harsh. The grocer was forced to write down £1.2bn against its planned exit from the US. There was also a UK property write down of £804m following a strategic review that meant Tesco would not go ahead with more than 100 sites it bought between five and 10 years ago. Both led to a halving of group pre-tax profit to £1.96bn - the first fall in profits for 20 years.

But Bush isn’t spooked by the pressure. Speaking exclusively to Retail Week in his first interview since taking the UK helm in January, Bush says he believes he can make Tesco loved again. “We’ve got to turn Tesco from a brand that is used to a brand that is chosen,” he says. “When you’re across the country in as many locations as we are there’s a good chance that a number of customers use Tesco because it’s convenient. And that’s great, but we also want customers to choose Tesco.”

For shoppers to choose Tesco, Bush knows he must deliver on Clarke’s six-point plan for the UK. “To choose Tesco you’ve got to make sure the shopping trip is at its very best,” says Bush. “It’s the right product, at the right price, in the right shopping environment, supported by brilliant staff. And I think when you get to that point, and we’re making great progress on all those points, then you start to really enjoy shopping at Tesco.”

Never-ending journey

Bush - who joined Tesco in 1982 and has spent the past nine years in the international business - insists that although Tesco has made great strides on the plan, the “journey” will never end. He points, in particular, to two areas where the grocer has progressed - stores and service.

Tesco refreshed just over 300 of its stores in the year, which Bush says has been “a great success”. He explains: “Those stores look very different, have more natural materials and warmer colours and tones. So if you walk around one of the refreshed stores, they look completely different - there is much more personality in the signage.”

Work on the revamped, more “human” stores will continue this year, with a focus on Express and Metro formats, particularly in and around London. The flagship Tooley Street Metro store in London Bridge carries the new look alongside a Euphorium Bakery and Harris + Hoole coffee shop. Tesco has stakes in both businesses.

“Harris + Hoole lends itself to certain demographics and certain stores,” says Bush. “Where we think it can add value and where we think customers demand to see something different, then we’ll put it in.”

In the year Tesco also bought restaurant chain Giraffe, the first branch of which will be installed at its Watford store in the summer. “The whole store will be refreshed and we’ll put in Giraffe. It’s a perfect fit with our customer base there,” says Bush.

He says that while the grocer would “never say never” to further acquisitions along the lines of Giraffe because “we’re always looking at opportunities to improve the store”, there is nothing on the horizon at present.

Tesco has also invested in staff over the past year, and its most recent internal survey of employee views produced the “best score we’ve received for seven years”, says Bush. “Our staff are more motivated, and feeling better about Tesco than they’ve ever done before.”

Tesco ran a programme called ‘Listen & Fix’ asking staff what they thought about the business and what changes they’d like to see. “It’s clear we’d been running the UK ‘hot’ in the past, and that had created an impact,” says Bush.

Tesco received an “overwhelming stream of feedback” from employees, who pointed out the things they wanted fixed in stores, such as broken equipment and more resources, he says. “They wanted to be given the tools to do the job for customers that they really wanted to do.”

Engaging customers

Tesco put 8,000 new staff on the shopfloor, and ran a customer engagement programme called ‘Making Moments Matter’. The programme has been “transformational” says Bush, who points out that customer feedback since showed a 40% reduction in complaints about staff in the past year. “Our staff are more confident, you can see it in their eyes, and when you’re more confident you tend to have better, more relaxed and engaging relations with customers.”

Bush says the launch of Tesco’s Price Promise - a pledge to be cheaper than rivals Sainsbury’s, Asda and Morrisons or shoppers receive a voucher worth the price difference - has “resonated brilliantly” with customers.

And while the grocer faces a challenge on the initiative after Sainsbury’s complained to the Advertising Standards Authority, Bush is “confident” on Tesco’s position. “We’re confident on price and this is the best, most transparent way we could have done [the price-matching scheme],” he says.

Work on ranges will continue this year too, following the relaunch of its Everyday Value brand in April last year, which is recording like-for-like sales tracking at over 6%. This year it will relaunch its top-end line, Tesco Finest.

A key part of the UK growth story is online grocery, which delivered sales up 12.8% to £2.3bn. Tesco launched a Delivery Saver subscription service, which accounts for almost 25% of its weekly online grocery sales. Tesco now has 150 grocery click-and-collect locations and plans to double that number this year.

However, Tesco’s general merchandise business - which does not include the strongly performing clothing category, where sales at its F+F brand now exceed £1bn in the UK - has not done as well as the grocer had hoped, either in stores or online.

Tesco reported in its results statement that general merchandise “continued to weigh on UK performance”, and like-for-likes fell 5% in the year. General merchandise online arm, Tesco Direct, has expanded its product offering but “its path to profitability has progressed less quickly than anticipated” the statement said. Bush says the grocer had made “great progress on food” in the past year but observes “you can’t do everything in 12 months”. He says: “We’re now in a position to tackle some of the challenges we have in GM.”

In stores, Bush explains there will be two areas of focus - one for shops of between 10,000 sq ft to 50,000 sq ft and one for those over 50,000 sq ft.

“For the smaller stores, customers tell us that first and foremost they go to those stores to shop for food,” says Bush. “When they’re shopping for food, they say it would be great if we could put together a really compelling range of what I call consumable general merchandise - products that customers would want to see and purchase on a regular basis.” Such ranges - which would include household and health and beauty - will be improved this year.

For the larger stores, Bush says the grocer is taking a “good hard look at how we can make a compelling offer come to life”. He says: “That has to start with the product, which has got to be right, the shopping environment, which has got to be right, and of course it’s got to be value for money.” Bush says Tesco is in the process of developing this offer, which will be tested at the end of the year and rolled out next year.

He adds: “As we go through the strategic review of GM in our stores, we will look at what we’re doing online. We will stabilise the [Tesco Direct] business, and return it to growth. These plans are developing and over the next couple of years you’ll see quite a big difference.”

Complementary skills

Bush certainly has his hands full, and he believes he can put his stamp on the core UK business along with Clarke.

“Phil and I have worked together for a long time,” he says. “In the nine years that I spent overseas Phil was in charge of the international business. We’ve got a complementary set of skills. I’m very much my own man and so is Phil and I will lead the UK in the way in which we need it led, which is in a collaborative way, engaging people to be their very best, inspiring people and moving at pace.”

Bush says that while leading businesses in Malaysia and Thailand he was “proud of the pace and the energy that we brought to life in those countries and that will continue in the UK”.

He says his relationship with Clarke - whom he describes as supportive and brave and “prepared to take risks that sometimes others aren’t” - is well balanced. “The strategic decisions we need to make in the UK are consulted with Phil, as they should be, but he trusts me to get on and run the business on a day-to-day, week-to-week basis and I’m very fortunate I’ve got a great team around me to do that.”

Bush has only just started on the journey in the UK, but there is plenty to go for, and if he makes Tesco a brand of choice for consumers once again, his star is only likely to rise.

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