The Hindu Business Line : Retail mantra: `Better, simpler and cheaper'

"We were a long way behind Sainsbury's which was the leading retailer. We got ahead of them by continually working on our business processes. We pride ourselves on our ability to change, adapt and use technology as it comes along."

JOHN BROWETT, Operations Director of UK, Tesco PLC.

India is on the threshold of a great era in retailing. With just about two per cent of the country's Rs 9 lakh crore retail industry taken up by the organised sector, the scope for development is vast . While customers do look for great prices and offers, it's the shopping experience that helps bring in business. "For this you need to work on the operating model all the time," says John Browett, Operations Director of UK, Tesco PLC. "In Tesco, we use a change management programme which we call Step Change to improve our operating model every year," he explains.

Speaking to The New Manager on the need for change management in the retailing business, Browett, who is responsible for improving the productivity and effectiveness of the UK business said: "The most critical thing for a retail business is to continue to work on its cost position all the time. You can't stand still, you can't just build a system and forget about it." He says retail is like any other industry, "Like in manufacturing, every year you have to become more productive." His advice for retailers is: First get the right standards and then continue to improve the operation over time.

Therefore, designing a business model and improving it over time is how Browett, who was previously the CEO of Tesco.com, describes his role at Tesco. And the UK-based retailer uses an approach called better, simpler and cheaper to achieve this objective. Improvements that are looked for should be better for customers, simpler for staff and cheaper for the company, he says. "In fact we have put in place a very big programme of work in the UK. We would be looking at about £250 million of productivity improvement." So, Step Change at Tesco constantly has people working on the processes, some on the front-end, some on the tills, some people into the distribution system and some looking at IT systems, he explains. These people are not only working on continuous improvement but also coming up with breakthrough ideas.

He gives an instance of how technology has been used to improve customer experience. "While check-outs with scanning is common enough, we have now got to the stage where customers can scan the products themselves. While you still have to have a check-out operator, one will do instead of four."

Commenting on Tesco India's role in the company's change management programme, he said that a large amount of this IT improvement is being done here. "Concepts such as Six Sigma, control variation and recourse analysis is being done here." In the UK, change management is much more basic, pertaining more to the supply chain aspect of the business. This is highly critical as it gives you a good shelf life. And in organised retail, this is what gives retailers lower costs and therefore translates into benefit for customers, he adds.

He attributes Tesco's success in the recent past to its change management programme. "We were a long way behind Sainsbury's which was the leading retailer. We got ahead of them by continually working on our business processes. We pride ourselves on our ability to change, adapt and use technology as it comes along," he emphasises. He describes Tesco as a "fairly restless organisation".

Another example of how Tesco has moved on is demonstrated through its online business. The store knew that its customers wanted products delivered home. "Initially we looked at the telephone service, but realised that the Internet was the best way to do it. And grocery shopping was most popular online because products like clothes would require the touch and feel experience. Now about 90 per cent of our online business is grocery." Incidentally, Tesco.com is the world's largest (sales over £500 million in 2003-04) Internet grocer.

Explaining the advantages of a global economy, he says that international retailers can see something better in each of the locations they operate in and bring that system into the process everywhere. "For instance, mobile technology in Korea is far ahead of any other country in the world. We would like to use that technology everywhere," he points out. As for India, he says that a large amount of IT development is done here. "Our intention is to bring more and more of it to India for two reasons: We want to tuck into the fantastic number of graduates that are available here and get the benefit of the cost difference that you get here."

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