Tesco pledges supply chain innovation and investment

Tim Smith said: “Our view is that, by 2016, around 10% of the sales we have got today will come from products that we don’t have today. Those of us who grew up with a food industry in exponential growth will see that as reasonably modest.”​

The key to delivering product innovation was investing in supply chain partnerships. Tesco wanted to work with suppliers on a long-term basis and everyone needs certainty to drive that, he acknowledged. “We saw some big processors recently, who all said the same thing: more certainty means more investment. That’s something that we have got to provide.”​

‘Price matters probably above all else and always has’​

While innovation was an important market requirement, other factors were important. “Price matters probably above all else and always has,” ​said Smith. “But, also important is quality, availability, freshness, ranging, service and, my favourite: trust. No one in that supply chain can do that on his own.”​

Shoppers are increasingly deciding exactly where, what and how they want to buy food and grocery items. “So, we, and our supply chain partners, have got to get it right because there are alternatives. If we don’t have the right products in the right place, at the right time, there’s always somewhere else to go.”​

Retailers and producers shared many of the same challenges brought about by the revolution in technology and global sourcing, he continued. Both operated in increasingly global markets.

‘Soaring demand’​

Soaring demand for pork in China was an example of how global markets were impacting the UK, said Smith. “The growth in demand for pork from China every two years is equivalent to the UK’s total annual consumption. So, whatever we think about the supply chain, we need to refocus the industry on what is happening around the globe, not just what's happening in the UK. That brings opportunities and challenges.”​

Former chief executive of the Food Standards Agency, Smith recently marked a full year working with Britain's biggest retailer.

Meanwhile, Tesco released third-quarter results today (December 4), which were described as “poor and disappointing”​​ by City analyst Shore Capital.