Tesco baton gets smooth hand-over

Tesco baton gets smooth hand-over

Selling more food in Britain than any other company, Tesco is the largest customer of UK Farming. What happens in Tesco has a real bearing on farming and the supply trade, so when its hugely successful boss decides he has achieved his ambition of building the biggest multiple store in the country, and that the time has come to hand over the reins, it matters to farmers.
In recent years any change at the top of large corporations has involved a level of in-fighting and posturing that makes business page headlines for months. Think of the drama attached to Sir Stuart Rose at M&S, of the changes at the top at EasyJet, BP, and many others. Yet the biggest supermarket does it seamlessly, with hardly a ripple.
It's called management, and Tesco has shown the City and the rest of the economy how company management can and should be done. They have been on a wave of success for more than two decades, and in that time have continued to woo and wow their customers with the products and service demanded. The smooth change-over at the top means there's no hiccup in trading, no concerns that the direction of travel is going to be altered.
Yet the new man Clarke is no clone of Sir Terry, despite their similar background and careers. Like Sir Terry, Clarke is intensely Tesco. He joined the company in 1981, became a board member in 1998, was responsible for supply chain activities, then moved to IT and became the boss of their international operations in 2004. Like Leahy, he thinks inside boxes, uses tried and tested methods, and is averse to risk. Customers are the important people in both their lives - which may help explain their tough stance with suppliers.

Tesco and farmers
Farmers have been forced to knuckle to the terms and conditions of supplying supermarkets such as Tesco, and a book could be written on how their buying policies have changed farming.
Buying power has held prices low. The buyers have been able to dictate the market by holding intermediates such as dairy companies, fruit and veg processors and food companies to account. The farmer at the end of the chain has been given a survival price, which can only be converted into profit through rigourous farm management. The processor is always concerned that others will provide Sir Terry with a better deal, a cheaper price, and hence a better margin, and knowing that the buyer will move for a fraction of a penny.
Quality demands have increased. Together with legislation, supermarkets have demanded increased shelf life, fresher produce and slicker storage and transport, and their dominance in the market means that, in the 14 years of Leahy's reign at Tesco, there has been huge investment in packing and storage by farmer groups and supply companies.
The food business has changed. From broiler chickens to broccoli the demand for uniformity has developed the factory farm where output is as close to a Ford car production line as possible. New genetics in plants and animals have been introduced to help. Closer management of inputs such as sprays and fertilisers, of livestock treatments such as wormers, vaccines and other inputs lift their effectiveness and reduce waste.

Negotiation
For much of the post-war period farmers and their leaders negotiated with government, over the effective price of cereals, milk and meat. The demolition of this relationship and the substitute of retailers and processors has been a huge shift for farming, and one that has taken some decades to adjust to. The drive of Sir Terry, and others, to maximise their bargaining position, to get the best deal going, has forced change on producers like never before.

The future
Sir Terry retires at a time of further change in the relationship between the buying public, the retailer and the supplier. He sees the slow but steady growth of farmers markets, a need to become closer to the actual grower and producer from an increasing percentage of the population. Quality is being measured less in terms of physical uniformity, but in taste and provenance. Marketing is less red and blue and more green and brown. People are being led to a time when things were simpler, more rustic, but still overlayed with modern attributes of long shelf life, convenience, visual appeal.
'Local' is a powerful word in today's marketing parlance, and retail giants will be working on using and developing the concept. It will make a further significant change in the relationship between farmer and retailer, and, as always, will create new opportunities for farmers.
Practical Farm Ideas will be exploring how these can be created and developed, and we'll be looking for case studies and examples for farmers to follow.

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