toys which are a flash in the pan and then they’re gone. So when we talk about value, it’s very much about the play value of the products, rather than just Tesco pricing.
Can suppliers, even small suppliers, pitch into Tesco and gain listings more
easily now? The opportunities which the Internet provides for small suppliers to cut through to customers prob- ably makes it easier now than ever, and hopefully by working with Tesco they can do that with a much bigger audience. We may well pick up on a product that is already selling well online, and the manufacturer can use us as a distributor and a retailer. That way, they’ll ben- efit from a broader audience and a marketing push. But suppliers can come to us with an idea too and, with online, we can put product out there and gain immediate responses.
How can suppliers and Tesco work
closer together to grow the business? Toys exist on innovation, but toys also need to be a profitable business and I think it’s important that we have the right level of innovation. Suppliers conduct a lot of research into their product so it’s as much of a ‘sure thing’ as possible, but we have to balance that against the amount of risk involved. Because if the business wants to stay profitable,
the more mistakes we make – i.e. the number of lines that don’t work as well as we want them too – the greater element of risk there is. We’ve also got to separate innovation from new
product churn. For instance, our new Christmas range has a high percentage of new product, which means if I’m putting a lot of my range in ‘new’ then I’m getting rid of a lot of product too. Often it’s taking out one product for a variation of the same thing. If
you’re a cynic, you can say that’s just having a new burst of activity to push something mums have to buy, because it’s going to be on TV, and the retailer then has to stock up to. So the cost of taking the old product off shelf, having to cut it to clear, which every retailer in the country will have to do because the space on the shelf is now being taken up by the new version, means I’m fundamentally less profitable.
So I’m saying: innovate absolutely, channel
resources into that. But constant product churn has got to be because mums want it, not because the industry wants it.
“Yes, we do trade toys hard but we’re in an
environment where we’re delivering really good
growth and we’ve been able to deliver really good growth for our suppliers too”
It has to be a joint responsibility about how profit- able our industry is. We need to focus this product churn on areas of innovation and ‘newness’, rather than just repackaging or refreshing product for the sake of it. So the cost to clear product because of this churn means we’re probably asking more of our suppliers, which we wouldn’t need if we have a joint responsibility for profitability. Everyone needs to
make their margin. Suppliers also need to think how things work for
retailers. They need to make sure products will work on-shelf, stand out well and be easy to shop. It’s got to be said, although in fairness some suppliers are great – so it can be done. Once you get to be a retailer of scale you try and
support innovation because you want toys that are going to give a lot of cachet and show you are prepared to take a risk.
How is Q4 shaping up – is it going to
deliver what you hope for? It’s looking solid. We’re pleased to be the fastest growing grocer, and pleased that we gained market share in the first half, so we just want continue on that curve. We have to execute the plan, deliver a great offer
to customers, make sure our stores are set up really well, make sure we’ve got great availability and hold our nerve. There’s no reason why we should think that cus-
tomers will not want to buy toys for their children at Christmas. So if we all jointly do a good enough job for them, then they’ll continue to spend on toys at Christmas. We just need to ‘calm’ a little. For retailers, it’s as much about availability: have
you got the right products at the right time? Every- one gets so hung up on what promotions people are running and actually it’s about having the products that mums want to buy, because you try persuad- ing a kid that they don’t want that toy, they want this toy because it’s on ‘special’ – that’s never go- ing to work. Listen to what mums want, because her kids will tell her what they want.
There’s a perception that Tesco can be a bit of an ogre when it comes to dealings with suppliers. What’s your
reaction to that? We love our toys, we really do and it’s not just about price, it’s about our commitment to a healthy toy trade for the long-term. Fundamentally, we say give customers what they want, when they want it and everything else will follow.
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