CASE Tesco Delivering The Goods
IMD371
07.10.2008
INTERNATIONAL
TESCO: DELIVERING THE GOODS (A)
Senior Research Fellow JeanLouis Barsoux and Professor
Jean-François Manzoni prepared this case as a basis for class discussion rather than to illustrate either effective or ineffective handling of a business situation. First-time visitors to Tesco’s head office were always surprised.
Based in a drab five-storey block, on an industrial estate north of London, it hardly seemed a fitting location for Britain’s most successful retailer, and one of the world’s top three (behind
Wal-Mart and Carrefour).
Its chief executive, Terry Leahy, was similarly low-key.
Sometimes slated as dull, restrained or lacking in charisma by profile writers, he was likened by one to “a lecturer in a secondtier university.”1 But appearances can be deceptive.
Knighted in 2002, Leahy was widely recognized as the architect of Tesco’s spectacular transformation from the UK’s number two supermarket chain into a global retailing powerhouse: multiplying sales and profits by more than 300%; taking one pound in every eight spent in Britain’s shops; becoming the country’s largest internet retailer and biggest private sector employer; and expanding internationally into more than a dozen countries, including Japan and China (refer to Exhibit 1 for financial data).
Analysts dubbed him “Terry Tesco” for his unwavering focus and spoke glowingly of his ability to “turn every innovation into gold.”2 Business writers traveled up to head office in search of the “secret recipe.” Typically, Leahy treated them to a Tesco ready-made meal in the windowless executive dining room –
“we don’t do swanky” as he liked to say – before revealing the
“secret”:
It’s this: never stop listening to customers and giving them what they want. It’s that simple.3
If they were lucky, he might have added that the company had worked very hard to organize itself “from A to Z so we listen to customers,”4 or else that the trick was “to watch everyone and everything and
07.10.2008
INTERNATIONAL
TESCO: DELIVERING THE GOODS (A)
Senior Research Fellow JeanLouis Barsoux and Professor
Jean-François Manzoni prepared this case as a basis for class discussion rather than to illustrate either effective or ineffective handling of a business situation. First-time visitors to Tesco’s head office were always surprised.
Based in a drab five-storey block, on an industrial estate north of London, it hardly seemed a fitting location for Britain’s most successful retailer, and one of the world’s top three (behind
Wal-Mart and Carrefour).
Its chief executive, Terry Leahy, was similarly low-key.
Sometimes slated as dull, restrained or lacking in charisma by profile writers, he was likened by one to “a lecturer in a secondtier university.”1 But appearances can be deceptive.
Knighted in 2002, Leahy was widely recognized as the architect of Tesco’s spectacular transformation from the UK’s number two supermarket chain into a global retailing powerhouse: multiplying sales and profits by more than 300%; taking one pound in every eight spent in Britain’s shops; becoming the country’s largest internet retailer and biggest private sector employer; and expanding internationally into more than a dozen countries, including Japan and China (refer to Exhibit 1 for financial data).
Analysts dubbed him “Terry Tesco” for his unwavering focus and spoke glowingly of his ability to “turn every innovation into gold.”2 Business writers traveled up to head office in search of the “secret recipe.” Typically, Leahy treated them to a Tesco ready-made meal in the windowless executive dining room –
“we don’t do swanky” as he liked to say – before revealing the
“secret”:
It’s this: never stop listening to customers and giving them what they want. It’s that simple.3
If they were lucky, he might have added that the company had worked very hard to organize itself “from A to Z so we listen to customers,”4 or else that the trick was “to watch everyone and everything and
References: Beddall, C. (2007) “British invasion,” Private Label Buyer, November 1: 26-37. 14 Leahy, T, (2004) “Tesco and what customers really want,” Brand Strategy, September: 15. Anon. (2002) “Store Wars,” Personnel Today, March 12: 27. Eglin, R. (2003) “Searching for stars on the shopfloor,” The Sunday Times, September 21: 6.