Sir Terry Leahy, chief executive of Tesco, told attendees at the first World Retail Congress in Barcelona last week that it wouldn't have made any sense for him to appear at a conference on global retailing 10 years ago.
Back then, he said, Tesco was operating exclusively in Britain and expansion outside the U.K. was not expected to be a financial engine for the company. Today, the situation is much different. Tesco generates more revenues from stores located in 13 countries outside of the U.K. than it does as the number one grocery retailer in England.
"Globalization and the growing power of consumers act like some kind of giant particle accelerator and everything happens much faster than it used to... Just as the opportunities for businesses, which get it right, are greater than ever before, so the penalties for those who get it wrong are equally dramatic. There is no gentle decline, no hiding place for retailers or suppliers who fail to spot consumer trends or adapt to changing markets," he told conference attendees.
According to Sir Terry, there are seven trends he believes will have a swift and dramatic impact on retailing either presently and/or in the near future.
The first is consumers' desire for simplicity. The pace and related stressors of life are beyond what many feel they are able to handle. Companies that manufacture or sell products and/or services that make the lives of consumers easier will be richly rewarded.
Closely linked to the first trend, said Sir Terry, is helping consumers save themselves time. "I sometimes think we should rename the species the Human Doing rather than the Human Being. People are working later so they want to be able to pick up something on the way home. That's why we came up with our Express convenience stores - they are now our most popular format, and provided the inspiration for our expansion into the Unites States."
Next on the Tesco's chief list is the concern that people have for their health and looks as they age (immortality as he calls it). This concern is among the reasons, he asserted, that organics grew nearly 40 percent in Tesco stores and why changes the company made in nutritional labeling have led to improved performance.
Globalization, Sir Terry's fourth trend, is having a dramatic impact as China and now India seemed destined to transform not only the manufacture of goods for sale at retail but other aspects of the business, as well. "At Tesco, virtually all of our IT is now being written in India, and I think that this is just the beginning," he said.
According to Sir Terry, the access to information will forever alter the consumer/merchant relationship. "It helps retailers know much more about what their customers want and think. But it also gives customers a very powerful tool," he said. "They can compare prices and buy online at the click of a mouse. They can look at a retailer's ethical or environmental policies and find out what is being said about them anywhere in the world."
Number six on the list is trust. Consumers will have a variety of measures to gauge the degree to which they can trust a specific retailer. Maintain that trust and opportunities will grow with it.
On the other hand, he said, "it (trust) can be destroyed overnight. Here is something of a paradox - the bigger a company becomes, the more vulnerable it is to loss of reputation, so its very size is the best guarantor of customer interests. I know this may seem counterintuitive, but the bigger you become, the harder you have to work to look after the public interest and to safeguard your reputation."
Of all the trends, "green consumerism" is the one with the greatest opportunity to transform society and retailing, according to the Tesco CEO. "All our research shows that consumers are more and more aware of their carbon footprint, and that they want us to help them tackle climate change."
They also want companies to make a concerted effort to deal with environmental issues. "I know conventional wisdom says that small is beautiful so far as the environment is concerned. But I don't think it follows. By harnessing the actions of 20 million customers in the U.K. for example, by pledging to halve the price of energy-efficient light-bulbs, by switching our transport fleet to bio-fuels, we will be able to make an impact that a corner shop can never make."
Discussion Question: What was your reaction to Sir Terry Leahy's statement that, "Globalization and the growing power of consumers act like some kind of giant particle accelerator and everything happens much faster than it used to… Just as the opportunities for businesses, which get it right, are greater than ever before, so the penalties for those who get it wrong are equally dramatic. There is no gentle decline, no hiding place for retailers or suppliers who fail to spot consumer trends or adapt to changing markets."?