Tesco primed for economic recovery

Sir Terry Leahy may be many things, but you won’t often hear him accused of being a ray of sunshine. So when you hear him speaking as positively as he was this week about how UK consumers have left the recession well and truly behind them, you know he is not trying to spin anyone a line.

Leahy’s view is that most of the data that indicates a recession is unreliable because it looks backward. He says shoppers started exhibiting recessionary shopping habits before it was recognised that the economy was in recession - in mid-2007 - and emerged from it last summer.

Tesco’s strong set of full-year results this week seem to back up that assertion, but you can’t ignore the strong dose of self-help measures administered by Leahy to steady the ship. In the UK that meant rolling out Discounter brands and doubling Clubcard points, a move that has locked Tesco’s customers in as the economy has moved into recovery. In worse hit markets the medicine was even stronger - in Ireland it cut prices on more than half the range by an average of 20%, turning a first-half 18% like-for-like decline into a second-half increase.

Despite Leahy’s optimism, the recovery is far from complete, and there is still the capacity for global shocks to blow it off course. But as it progresses, here and globally, the initiatives put in place by Tesco through the downturn have put it in pole position to exploit the recovery.

The potential in its Asian markets, notably Korea and China, is huge, while here, there is no other retailer with anywhere near the same potential to develop services like banking. Tesco has the customer data, it has their trust and it has the footfall. Our story about funerals at the start of the month was an April Fool. But in a few years it might not seem quite so far-fetched.

Sustainability as standard

2050 sounds a long way off, but that is how far ahead Tesco is thinking when it comes to the environment. That is when it aims to become a zero-carbon business and it, like many retailers profiled throughout this special green-themed issue, has not let the recession divert attention from its responsibilities to the planet.

As our ICM poll shows, more customers than ever care about the environmental impact of how and where they shop. Aiming to be a sustainable business is not an optional extra today and certainly won’t be tomorrow.