Event Review
A Reception with Sir Terry Leahy, Chief Executive of Tesco PLC
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Thursday, April 7, 2005
 
On Thursday 7-April at the Lansdowne Club, Sir Terry Leahy, Chief Executive of Tesco's, joined the club for an informal dinner followed by a talk. The event was organised with the help of SBSAA Spain who's president, Alvaro Munoz, is a key supplier to Tesco's and helped to arrange the date in Sir Terry's busy diary.
 
Terry Leahy's talk about the transformation of Tesco's into the world's 3rd largest retailer was a rare treat. Mr. Leahy is low key and rarely does speaking appearances. However, he makes exceptions for academic institutions as he is a great believer in education. He was the only one of 4 brothers from a working class Liverpool family to receive higher education. Thus it was a treat that the SCGB had this unique opportunity. On the flip side, this was also a rare opportunity for Sir Terry to engage in academic debate about his strategies which must have proved a refreshing change from equity analyst and results presentations that he is normally accustomed. Sir Terry is a 'lifer' Tesco's employee and he has grown his business focusing on two key areas: 1) listening to customers, and 2) motivating employees.
 
In the early to mid 1990's, Tesco's was a fraction of the size of the 2 market leaders, Mark and Spencer's and Sainsbury's. Tesco's at the time was desperately trying to follow the lead of the other two retailers but had marginal success gaining ground and needed a dramatic change. When Sir Terry was Marketing Director, Tesco's engaged in a massive customer understanding programme where the company interviewed 250,000 customers. With this data, they began to transform the store and today, its market capitalisation is significantly larger than both M&S and Sainsbury's combined. To this day, Tesco's continues to innovate based upon the wishes of customers rather than Tesco's arranging their internal structures to maximise profitability with disregard of the consumer. In being successful, especially in their recent expansions into new markets, Tesco's has followed 5 principles:
  1. Flexibility to adapt and adjust existing processes,
  2. Be local,
  3. Understand on their place in the market,
  4. Focus on their skills and capabilities rather than simply on economies of scale, and
  5. Promote their brand.
The second source of Tesco's success has been to motivate all 200,000+ of its employees. According to Sir Terry, a customer's willingness to visit your store again and increase spending are based on the impressions and experiences they received from their last visit. As a result, it is critical that every employee's actions generate positive goodwill for customers. He gave four key elements for encouraging employees to be motivated and willing to do that little bit more for the company:
  1. every individual should find their job interesting,
  2. every employee should feel respected and respect should permeate throughout the environment,
  3. there should be opportunities for advancement should an employee wish to grow, and
  4. everyone should have a good boss who supports them and definitely should not feel that their boss impedes their growth or enjoyment of the work.
Sir Terry's speech was followed by an engaging, yet informal and frank, question & answers session. This could have gone on all evening as the room was filled with raised hands. Sadly, the evening had to come to an end but everyone in the room, including Sir Terry, immensely enjoyed the evening.
 
Derrick Chow
 
Event review contributed by Event Committee.