Tesco revealed its profits plunged in its full year results this morning. Retail Week looks into how chief executive Philip Clarke’s UK turnaround has progressed two years in.

1. Service & Staff – more staff for existing stores, initially in fresh food departments

Tesco has launched training initiative ‘Making Moments Matter’. More than 250,000 colleagues were encouraged to “deliver better customer service every time”.  The grocer has also rescheduled 300,000 hours this year to offer service in the right departments at the right time “based on when customers need them most”.   Tesco claims these initiatives have freed more time for colleagues to serve customers.

The retailer concedes there “is more to do” in driving customer perceptions of its service. It will now focus on service points in store, fresh food, and grocery home shopping.  It has trained its fishmongers, for example, on how the supply chain works, and how to help customers prepare and cook fish at home.  In 2014/15 Tesco will extend this type of training to its butchers and fresh produce teams.

2. Stores & Formats – faster store refresh programme; introducing a warmer look and feel

Tesco completed around 300 store refreshes to make them more contemporary, improve the shopping environment and make them more compelling for customers.  It says its approach is based on a “detailed understanding of customers’ different shopping missions”, helping it to tailor the offer, range and layout of each store.  Tesco says the typical refresh store has a sales uplift of between 3% and 5%.

Tesco boss Philip Clarke revealed in February it would accelerate its store refresh to 650 stores in 2014/15 with the immediate focus being Extra stores, with 110 revamps planned this year.

It has been piloting what its Extra store of the future will look like, introducing ‘’Next Generation’ F&F departments to 104 of its stores this year, with around 140 planned for the year ahead.  Tesco will also expand its casual dining offer by opening over 100 Giraffe, Decks and Harris+Hoole outlets next year.

Tesco is also trialling reducing selling space in two Extra stores, repurposing 41,000 sq ft. It has introduced new tenants such as the ‘Original Factory Shop’ and soft play centre ‘Funky Monkeys’ in Newport and a gym ’Xercise4Less’ in Stockton. The grocer plans to complete another five similar projects this year.

It has also trialled a grocery home shopping hub concept in Mansfield Extra, using to fulfil a greater proportion of online orders, including picking some lines directly from its store warehouse.  It has plans for a further three similar trials in the year ahead.

In its Express stores it has refreshed almost 200 stores this year and plans to refresh another 450 next year.

3. Price & Value – better prices and promotions, more personalised offers

Tesco has made an initial investment of at least £200m into lowering price on “products that really matter” and so far prices have been cut by an average of 24% on items including milk, eggs, butter and key vegetable, meat and salad lines. It plans to extend this in the year ahead.

Tesco said every customer perception on price has improved over the last 12 months, but admits it needs to do more. 

At its investor event in February it vowed to be more focused, competitive and relevant in the promotions it offers customers.

4. Range & Quality – better ranges, starting with re-launching the Tesco brands

Tesco relaunched its Finest collection in October and has recently improved 8,000 products in its core Tesco range.  In January, it relaunched Healthy Living, with three quarters of its products new or improved and, as a result, increasing overall customer satisfaction.

Tesco has also focused on provenance, shortening the supply chain, and ensuring greater control over its food products.  It has developed a “world-class traceability and DNA testing system” and has tested over 5,300 products since January 2013.  All of its own-brand fresh chicken, eggs, milk and butter are now 100% British, and all of its beef is British and Irish. 

The grocer is trying to build better relationships with farmers by offering two year contracts, with 300 already signed, and says it is the first grocer to do so. It has also increased the amount it pays for milk this month.

Tesco is now turning its efforts to improving range, quality and innovation in fresh produce.

It says it is working more closely with dedicated suppliers, to help guarantee freshness, taste and value.  A new look and feel to its produce departments is planned in the year ahead and its ‘Produce Academies’ will help staff deliver service and advice to shoppers.

5. Brand & Marketing – better, clearer, more relevant communication with customers

Tesco launched ‘Clubcard Fuel Save’ last month giving customers savings off fuel by scanning their Clubcard in store or online.  It is currently trialling a digital coupons app in Plymouth, which it says is a step towards creating a digital Clubcard.

It has also created a new social media scheme The Orchard. Since November, it has gained 60,000 members.

6. Clicks-and-bricks – click-and-collect roll out, transforming range and online presence

The retailer now has over 1,750 click-and-collect locations and plans to increase this number significantly. It has also piloted collection trials at six London tube stations. It plans to launch 50 non-store collection points in the year ahead.

The grocer has worked on its infrastructure and the automation it is using at its new Erith facility enables it to pick products three times faster than in stores.

Tesco’s new home shopping vans will be multi-category enabling it to fulfil general merchandise orders and will feature collapsible racking to carry larger items from its new general merchandise range.   It is also improving the delivery service with the roll-out of training to all drivers in the year ahead.

It has committed to sharper prices in home shopping, including in delivery prices and offering free click-and-collect. 

The retailer won praise for its own brand tablet Hudl that won the Oracle Retail Week ReThink Retail Technology Initiative of the Year and plans a second device later this year. It also added to its entertainment services by launching Blinkbox books last month.