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IGD 2011

Agenda
Key developments Key personnel changes Tesco strategy Tesco in the UK Tesco international Tescos other pillars Supplier implications Next steps

Tesco Trade Briefing 2011, London, 5 May: GO IGD 2011

Key developments
On 2 March 2011 Philip Clarke took over from Sir Terry Leahy as Group CEO of Tesco This has resulted in a number of changes to the following:
The Tesco PLC Board (see slide 6) The Executive Committee (see slide 7) The UK Board (see slide 8)

Tesco Trade Briefing 2011, London, 5 May: GO IGD 2011

The Leahy legacy

Measure
Group turnover (ex VAT) Group operating profit UK Turnover (ex VAT) Non UK Turnover (ex VAT) Stores outside the UK Space outside the UK

1997
13,887m 774m 13,118m 769m 190 2.7m sq ft

2010
56,910m 3,412m 38,558m 18,352m 2,329 60.9m sq ft
I wanted to develop a purpose and values that could sustain Tesco through its challenges and encourage and grow future leaders.

Tesco is now the worlds 3rd largest retailer, and is recognised as an industry leader in format and private label development Clubcard has become a core element of the Tesco strategy Internationalisation has been a major focus under Sir Terrys stewardship, with the retailer now active in 13 markets outside the UK Sir Terry also spearheaded development of Tescos non-food and services businesses Tesco Trade Briefing 2011, London, 5 May:
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IGD 2011

The Philip Clarke perspective

On Digital
Were going to be the best connected worldwide team in retailing. New technologies and new platforms extending the way we communicate. Well use the skill and scale of Tesco to create more value than any other retailer.

On International
Our international business is growing pretty fast, and its growing well. Its been my focus for the past six years, and in some ways were just at the beginning.

On Communities On Customers
At the end of the day, its all about our customers. Its about the Tesco team working together with our stakeholders that will bring even greater success in the future Weve now got 5,000 stores worldwide and everywhere were committed to really contributing to our communities wherever we are. Thats a very big responsibility; it means local sourcing, it means all our plans to help tackle climate change. It embraces all of our community initiatives.

Tesco Trade Briefing 2011, London, 5 May: GO IGD 2011

Key changes The new Tesco PLC Board

To get this right we need the right structure, and Ive got a fantastic team
Philip Clarke Group CEO Tesco PLC

Tim Mason Deputy CEO Tesco PLC and CEO Fresh & Easy

David Potts CEO Asia

Richard Brasher CEO UK and Republic of Ireland

Laurie McIlwee Chief Financial Officer

Andrew Higginson CEO Retail Services

Lucy Neville-Rolfe Executive Director (Corporate & Legal)

Note: Also on the board are nine non-executive directors. Source: IGD Research, Tesco

Tesco Trade Briefing 2011, London, 5 May: GO IGD 2011

Key changes The new Executive Committee

I am delighted that I have been able to bring together such a strong team which possesses the right blend of talent and experience

Philip Clarke Group CEO

Tim Mason Richard Brasher Andrew Higginson Laurie McIllwee Lucy Neville- Rolfe
Note: Philip Clarke is also Chairman of the Executive Committee. The executive committee exists to run the company below the PLC board.

Deputy Group CEO, CEO Fresh & Easy CEO UK CEO Retailing Services CFO Executive Director (Corporate & Legal) CEO Asia Group Personnel Director Property Strategy Director CEO Central & Eastern Europe Chief Information Officer COO UK Internet Retailing Director
Tesco Trade Briefing 2011, London, 5 May: GO IGD 2011

David Potts Alison Horner Gordon Fryett Trevor Masters Mike McNamara Noel (Bob) Robbins Ken Towle

Key personnel changes The new UK Board

Per Bank, Commercial Director UK Clothing, Electricals and GM Noel (Bob) Robbins, Chief Operating Officer Richard Brasher CEO UK and Republic of Ireland I am very pleased to have such a strong team to run the UK business. Together we have huge experience across all aspects of our business with a unique combination of both international and domestic expertise. Kevin Grace, Property Director David North, Corporate Affairs Director Judith Nelson, Personnel Director Mike Iddon, Finance Director Carolyn Bradley, Marketing Director Tony Keohane, CEO Ireland
Tesco Trade Briefing 2011, London, 5 May: GO Source: Tesco IGD 2011

Tesco strategy The Five Pillars

To grow the core UK business

To be as strong internationally as in the UK

To be as strong in non-food as in food

To develop retailing services

To put the community at the heart of what we do

Tesco Trade Briefing 2011, London, 5 May: GO IGD 2011

Tesco strategy Group turnover and growth

International share of sales (%), 2010

33 67
UK share of sales (%), 2010

Tesco Trade Briefing 2011, London, 5 May: GO Source: Retail Analysis IGD 2011

Tesco in the UK Trading Structure

Richard Brasher UK CEO

In addition, Tesco stated in January 2011 that it will shortly be appointing a Group Commercial Director

Per Bank
Commercial Director Clothing, Electricals and GM

John Scouler
Commercial Director Packaged Foods and BWS

Roger Fogg
Commercial Director Household and H&B

Andrew Yaxley
Commercial Director Fresh Foods and Dairy
Tesco Trade Briefing 2011, London, 5 May: GO

Source: IGD, Tesco

IGD 2011

Tesco in the UK Overview

Clear market leader in the UK with sales of 39.1bn and operating profit of 2.1bn in 2009/10 Latest trading (Christmas 2010) shows sales up 0.6% on a like-for-like basis and 4.2% in total It has 2,754 stores in the UK, making up 55% of its total estate by store numbers 34% of Tescos total space is in the UK and its new space development plan remains strong Philip Clarke will brief analysts on performance in 2010/11 and the outlook ahead on 19 April 2011
Tesco Trade Briefing 2011, London, 5 May: GO IGD 2011

Tesco in the UK Trading strategy

Tescos UK business is core to its performance, and the new board will have a number of UK priorities:
Continuing to focus on the customer and to earn their lifetime loyalty Driving like-for-like sales growth Driving further space growth across key formats Improving the focus on quality Greater tailoring across store formats Developing suitable platforms and channels through which to develop non-food and retailing services Meeting key aims on sustainability and the environment as part of a longer term goal to become carbon neutral by 2050

Tesco Trade Briefing 2011, London, 5 May: GO IGD 2011

Tesco in the UK A truly multi-format retailer

Extra now ranks as the single largest format for Tesco in the UK by space, benefiting from both superstore conversions and new store development
Tesco Trade Briefing 2011, London, 5 May: GO Source: IGD Research IGD 2011

Tesco international Sales split by region

NAFTA
(0.8% of turnover) 165 stores Convenience/Supermarket Hybrid format

Europe
(81.9% of turnover) 3,848 stores Hypermarkets, Supermarkets, Convenience, Discount stores, General Merchandise stores

Asia
(17.3% of turnover) 1,418 stores Hypermarkets, Supermarkets, Convenience stores

Tesco Trade Briefing 2011, London, 5 May: GO Source: IGD, Tesco IGD 2011

Tesco international Key features

Tesco has a multicountry expansion focus across Asia, Europe and the US Strong space growth initiatives in place, with c.7m sq ft added in 2010/11 Local management is a key feature Increasingly Tesco is utilising the scale and skill of Tesco Group
Tesco Trade Briefing 2011, London, 5 May: GO Source: Tesco IGD 2011

Tesco international Priorities

Growing scale:
Asian markets in particular will be a powerful driver of long-term growth and returns for the retailer with significant potential for developments in modern retail

Best practice transfer:

Tesco is seeking to achieve this across areas such as systems, ranges and formats, with dunnhumby, F&F clothing and discount brands among the key current priorities

Multi-format strategy:
Increasingly, Tesco is pursuing a multi-format strategy internationally, as it seeks to open up new market segments as large format retailing matures. Driving convenience internationally is a growing priority.

Property:
Property has long formed an important element of the strategy but in China Tesco is taking this to a new level, as it focuses on mall development as part of the growth strategy
Tesco Trade Briefing 2011, London, 5 May: GO IGD 2011

Tesco international Top Markets to 2015

China will become one of Tescos top 5 markets by 2015 Thailand, Poland and S. Korea will also show strong growth

Tesco Trade Briefing 2011, London, 5 May: GO Source: IGD Research and estimates IGD 2011

Tescos other pillars Priorities ahead

Driving non-food online and adding further space for nonfood ranges into stores will be areas of focus including building Tesco Direct and growing Extra hypermarkets Expect more focus on international buying hubs and rollout of best practice internationally eg F&F clothing Tesco.com is already a global leader Tesco will seek to transfer best practice in the UK to other markets Building its position as a fully fledged bank, with current accounts and mortgages due later this year Global leveraging of dunnhumby and Clubcard insight

Non-Food

Services

Become a zero carbon business by 2050

Community

Reduce emissions of products sold by 30% by 2020 Help customers reduce carbon footprint by 50% by 2020
Tesco Trade Briefing 2011, London, 5 May: GO IGD 2011

Outlook and Supplier Implications

Recognise the potential for further strategy changes as Philip Clarke establishes his approach and reconfirms Tescos main areas of focus ahead In the UK, expect Tescos recent focus on range and quality to continue and consider the opportunities and challenges this can bring . At the same, the latest price check launch confirms the continuing importance of value for Tesco Sharing of best practice across markets remains a major focus internationally, not least in areas such as Clubcard, technology, food and clothing ranges and formats. Indeed, understanding Tescos international business appears set to become increasingly important across its supplier set, given a potentially even greater focus on international going forward Further leveraging the uniqueness of Clubcard will be a continuing priority being aware of the increasingly significant role of Clubcard within Tescos promotional strategy is key Philip Clarke has already spoken of his focus on digital suppliers should keep upto-date with Tescos moves in technology as it seeks to get behind the trend towards smartphone and online shopping. Driving multi-channel capability will be a major focus
Tesco Trade Briefing 2011, London, 5 May: GO IGD 2011

Next steps
Sign up for the free Retail Analysis newsletter Attend the Tesco Trade Briefing 2011 to hear from Richard Brasher and his senior marketing and commercial colleagues

Speakers include:

Richard Brasher Carolyn Bradley Roger Fogg David North Bob (Noel) Robbins John Scouler Matt Simister Andrew Yaxley
IGD 2011