Tesco ends 'hit and hope'

08 February, 2008
In-store bakery buyer Simon Holt says the bakery division is returning some of Tesco's strongest food sales. So what's the secret? Andrew Williams gets the inside track at Tesco HQ
Page 18 
On visiting Tesco's inconspicuous HQ in Cheshunt, surrounded as it is by Hertfordshire suburban semis, the initial impression is that it's a pretty understated setting for the brain-room of the retailer that accounts for one in every eight pounds that leaves our wallets.
This changes the moment you enter the bustling foyer, where a hubbub of wheeling and dealing presumably masks the squeals of suppliers jamming their feet in the door. It's here that I'm greeted by Simon Holt, Tesco's genial but no-nonsense in-store bakery (ISB) buyer, who tells me that the ISB is on a roll, reporting some of the strongest numbers within food at Tesco. The multiple is upping its game in everything, from on-pack communication, skills training to, crucially, product launches. Henceforth, nothing will go on shelf until it's a sure bet (BB, 25 Jan, pg 4). "In-store bakery is doing really well. For a long time in Tesco it hasn't been," admits Holt.The step-change came last year when Tesco gave the green light to a hefty training investment: all its bakers will be sent on a three-day bespoke course with the Campden and Chorleywood Food Research Association. "Customers tell us that in-store bakery is a real hero category and the business has already been supporting us with exciting plans for this year. One thing we've done is really engage our bakers, because I think they felt a little bit unloved. But over the last 12 months, we've communicated with them a lot more."He says that, from now on, Tesco will look to make as much bread as possible from raw ingredients, although some of the more elaborate breads that require longer fermentation will continue to be bought in. This year Tesco will be looking at its methods of packaging to better communicate its in-store credentials - always a struggle in the ISB."It's my responsibility, or my product developers' responsibility, to have the best products on the market," says Holt. "If there's a story attached to it we need to be telling customers that. People bang on about provenance, but my bread is made in front of our customers from the best flour we can get. You can't get much more natural than that in terms of provenance."Communicating that message is something we haven't traditionally done that well, so communication will be a big project this year." This is why Rolo-branded donuts and cookies have been two of the most successful launches in the last 12 months and the lines are already worth around £2 million each. They're a good product and customers know the brand," he says. "But I cannot communicate all the health benefits of a Finest Multigrain Farmhouse loaf due to a lack of space on pack. So selecting products that customers can understand very quickly is important."== COMMUNICATION PROBLEM ==The difficulty in conveying marketing messages in-store is why products like Fairtrade haven't touched the category, he adds. "If you look at Green & Black's chocolate, they've got a lot of packaging to communicate that message. I could move all the chocolate in our cookies to Fairtrade but how do I communicate that? At the moment we've left that to the brands, but if it's something the customer wants, we'll always listen to them." And that packaging is set to reduce even further, following a pledge to cut packaging by 25% this year.New in-store products need to offer real innovation - not just duplicate what works in, say, packaged morning goods. "Where is the customer rationale for launching brioches through the in-store bakery? Have you done your research and is it a growth area? That mentality of suppliers phoning buyers up saying 'I've got this great product, we think you could stock it' just won't wash any more."While this approach may have worked when Holt was a Selfridges Food Hall buyer, at Tesco his focus is as much on the figures as the quality. "The main KPI at Selfridges was, 'What is the next big thing in food?'" he says, but dealing in enormous scales at Tesco means that making products more "relevant" to customers brings number-crunching to the fore: sales, profit, margin, waste, performance against the market and availability are the first things he looks for in a product - something suppliers should bear in mind.Holt insists suppliers must back up a proposition with a sales plan: how will the product be launched; will there be introductory offers; how will it be packaged; what is it going to look like on shelf; and will there be 100% availability all the time?Using market data such as Tesco Link - Tesco's free-to-access sales information website - is essential. "If it's not backed up with that information the likelihood of me launching it is very slim," states Holt. "I've got a great supply base but suppliers need to focus on the customer. Many of them have historically thought that 'Tesco is the customer'. I want suppliers to think more about the end-user."The aim this year will be to end the 'hit and hope' approach of the past. One such example was flatbreads, which fell flat in the ISB last year. "Customers just didn't understand why the ISB was selling flatbreads," he recalls. "It was a good product, but it didn't transfer to the shelf. We took them out within two months."Put simply, he says, any new product has got to be better, simpler and cheaper: "Everything has to abide by those three simple principles." ----=== CV ===Tesco ISB buyer for the past 18 months; Holt was previously a buyer of leeks, garlic, mushrooms, onions, swedes and turnips. Before that, he bought wet fish, smoked fish, meat and luxury goods for Selfridges Food HallPersonal approach: "What I've tried to do is have a level of honesty and integrity with my supply base. Sometimes you have to make difficult decisions but if you're honest and there's an element of trust you're more likely to have a better relationship."Pastimes: "We have a gym here, which is a great perk. I live in London so I like the theatre, films, concerts. I've got friends who work in music television, so I get invited to lots of gigs."Holt's new product checklist for suppliers:* It's got to offer... great quality, great value for money, real innovation and be customer-focused* It must be...better, simpler, cheaper than what's in the market*...and backed up with... a rationale based on customer data* Suppliers need to be... developing bespoke products for Tesco Express, smaller pack sizes and eat-on-the-go formats, such as its successful cheese twist



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