Tesco Understands Economics
First off, that’s a pretty nasty nickname, being called the Robert Mugabe of anything. I don’t know the whole history on that one, but Tesco is a British retailer, who could be described as the “Lean Wal-Mart.” More about Tesco’s Lean work can be found through a quick Google UK search — they are featured quite often through the Lean Enterprise Institute and the Womack/Jones books (including Lean Solutions: How Companies and Customers Can Create Value and Wealth Together).
For all the talk about companies increasing prices because costs are going up (ignoring, at their own peril, basic supply-and-demand economics), Tesco has it right, I think. Their CEO and Chairman, Sir Terry Leahy, says:
“It’s impossible for us to manipulate our prices because in this market if you price up unilaterally, it’s commercial suicide. Therefore the industry would have to do it collectively, but it can’t because that would be collusive behaviour.
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How many of the companies that are raising prices, using costs as an excuse, are committing “commercial suicide?” Time will tell.
Another thing in the article that reminded me of Toyota was Tesco’s frugal and spartan headquarters, as described by The Independent:
It’s not exactly how you would expect to find the boss of the world’s third biggest retailer. After 20 minutes’ train journey into the indeterminate hinterland just outside London you walk a few hundred yards to a rather seedy industrial estate. It announces itself with a garage offering MOT testing and repairs. Barely a hundred yards beyond the car bashers looms a low-slung concrete block. This is the global headquarters of Tesco: annual sales £51.8bn, yes, billion.
The single receptionist sits beneath a sign reading: “Every Little Helps”. Two minutes later Sir Terry Leahy is in the reception to take me upstairs to a fittingly unpretentious office.
Frugality – a core Lean principle, don’t you think? “Every Little Helps” — that’s kaizen at work.