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Exclusive Interview:
Sir Terry Leahy, CEO, Tesco Plc

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  July- August 2009


Sir Terry Leahy, CEO, Tesco Plc For Sir Terry, Tesco’s core purpose is ‘to deliver value for customers to earn their lifetime loyalty’. There is no mention of products, no reference to the bottom line or market share, but a clear focus on people - the customers.

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Terry Leahy, born in 1956, was brought up in a prefabricated maisonette on a Liverpool council estate, and was the only one of four sons of Irish Catholic immigrants not to leave school at 16. As all his friends testify, he has not forgotten his roots – not for a second, writes a journalist in his recent report for a UK daily.

This probably helps him understand ordinary consumers, who, he believes, drive businesses and economies forward.  

For him, it is consumers who reward initiative and provide incentives for people to innovate, create, produce, with each transaction, each bleep at the checkout, sending a message to a business to produce more of that product - and helping to shape a trend.

A successful company is one that responds to those signals whereas others which have plans created on the basis of abstract theories and assumptions, not on what consumers say and think, may be heading towards a bankruptcy.

“Just as businesses which ignore consumers are bound to fail, so too are economies.

Think back to the planned economies, where bureaucrats decided on what and how much to produce. Consumers were given a choice - it was ‘take it or leave it’. And the result was economic stagnation and collapse.”

Tesco was forced to come up with a new strategy in the recession of the 90s that it has followed ever since.

Losing customers to its rivals, there was a sense that Tesco had lost its sense of direction and, worse, its identity. Reactive and defensive, Tesco responded to the competitors, and judged itself according to their performance.

Tesco discovered its core purpose – ‘to deliver value for customers to earn their lifetime loyalty’. There is no mention of products, no reference to the bottom line or market share, but a clear focus on people - the customers.

There was no magic silver bullet, no new-fangled business theory - just a series of improvements that we rolled out to deliver for the consumer, and earn loyalty: one in front cut-the-queues initiatives, new formats, a move into new markets like non-food.

Sir Terry refused to predict when the downturn would end, but said retailers must keep pace with trends such as a focus on green issues and healthy options, particularly when “the world has been turned upside down, and when it is easy to lose sight of simple truths and become confused.”

He stressed that ultimately the consumer will decide when the recovery is here, saying that there is a need to be prepared for that recovery when it comes.
"One thing we can plan for is that, when the recovery comes, long term challenges and trends will come back into focus. The challenges are well known - climate change, a rising population, the pressure on natural resources, ageing population.

Companies that prepare for these trends, while delivering for consumers today, will prosper as the economy strengthens. But they will have achieved something else: they will have won customers’ loyalty. Read the Complete Article Subscribe to ASEANAFFAIRS Magazine

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