Tesco chief’s vision of the e-future

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In a speech today to the British Chamber of Commerce in London, Terry Leahy, chief executive of Tesco, committed the company to a strategy of dynamic change, focusing on international expansion and e-commerce as key drivers of growth.

Pointing out that Tesco is leading the way for British retailers in two key areas, he said:

“Our philosophy on globalisation is this: we buy from everywhere to meet consumers' needs in this country while backing British business by selling more of its products than anyone else in the world from our industry. But we will also sell everywhere within the limits of our ability to fund international growth and to find attractive markets. We initially identified two areas: central Europe and the Far East, as offering immediate potential and we have driven those two opportunities through a mixture of acquisitions and new store openings. Every year for the next five years at least we will grow our sales space by 20%, we will open three times as much new space outside the UK as within.

“By the end of 2002 we will have 70 hypermarkets in Central Europe and over 60 in the Far East. We have been welcomed, both by the authorities in the various countries and by the people who flock into our stores. British retailing expertise combined with enthusiastic local management is making a real difference to people's lives.

“The second area where tremendous changes are going to affect us all is in e-commerce. Much of the publicity surrounding e-commerce on the Internet has been all about the customer interface. However, one industry view is that the value of Business to Business transactions are 10 to 15 times the value of business to consumer. We, at Tesco, intend to be at the forefront of this new trading environment by utilising the technology for e-procurement and building on our investment in our supply chain Extranet the Tesco Information Exchange.

Our vision is the creation of an industry exchange that will transform working relationships with our trading partner not just enhance current working practices. Even though we have a track record of ground-breaking trading relationships with our suppliers, we have only begun to unlock the real potential that the Internet will offer.

“To this end we announced last week a unique web-based Business to Business electronic marketplace with ten of the world's leading retailers including Auchan, K-Mart, Ahold, Kingfisher and Marks & Spencer. They have combined sales of $300billion. Many more are joining and it is going to get wider.

“WorldWide Retail Exchange is a vertical marketplace focusing on transactions generated by retailers operating in the food, general merchandise, and drugstore sector. The Exchange is open and I am delighted to say, provides an information link between multiple buyers and sellers. The Exchange will also provide the means for auctioning excess products.

“This development will benefit both large and small suppliers who wish to trade with internationally renowned retailers.”

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