Steve Robinson landed the job of chief executive of Tesco's ambitious internet and catalogue non-food arm by chance. The former finance director at Argos confesses he went to Tesco for the UK finance director's job, but was offered the role of chief executive of Tesco Direct instead.
It was an astute move on Tesco's part to recruit the man credited with helping Argos' then MD Kate Swann transform the business and Robinson is under no illusion about why he was taken on. "I knew about multi-channel retailing as Argos was the early specialist in that field. I was with the business as it grew from £2bn to £3bn. That's difficult expertise to buy."
But the attraction was clearly mutual. "This was a great opportunity for me and my first move out of finance," says Robinson.
Now at the helm of one of the most exciting arms of the Tesco business, Robinson makes no bones about the fact that Tesco sees itself as the future number one in non-food and that its internet and catalogue business is integral to achieving that ambition.
This month, Tesco Direct is rolling out a bumper 1,000-page catalogue with a range of 7,000 items and increasing its online offer by 25% to 10,000 items (see The Grocer, 24 February, p13).
"We have looked at Argos, Comet, Amazon and John Lewis to see what they are doing and at how we can make that better," says Robinson.
It was quite a challenge in the timescale involved, he admits. "I inherited less than a handful of people working on the project and recruited about 200 people in a year," he says. "It's easy to play down how difficult it has been, but to build a multi-channel business in less than nine months with lots of different complex systems was monumental."
Fortunately the buying team was already in place. "It would have been madness to set up our own as the whole premise of Tesco Direct was that we already had a brilliant non-food buying team for Tesco stores and we needed an outlet to grow the business to allow them to be a big power in non-food buying," says Robinson. "And Tesco Direct is fantastic for them as buyers can purchase whatever they want. My favourite example is that there are only two types of George Forman grills in-store; but with Tesco Direct, there's a whole page."
Setting up the systems was no easy undertaking, though. "If we had started off with a blank page, it would have been easier, but we had to integrate systems not capable of handling the level of information we needed. It was a massive task to take images, plus log detailed descriptions, of 7,000 products from a standing start."
One of Tesco Direct's priorities was to ensure that images and descriptions were as clear as possible to make up for the fact that shoppers can't handle the products. Logistics were another challenge. Because of the diverse range of product sizes involved, Tesco Direct uses three depots. Small goods are handled at a dedicated 200,000 sq ft depot in Daventry; the delivery of large goods and white goods have been outsourced to Ceva and Expert Logistics respectively.
Robinson is proud of the fact that Tesco Direct offers next-day delivery on small goods for a modest £4.85.
"No-one was offering next day as standard, but why should the customer have to pay a premium? We had to bring in new technology as the Tesco supply chain was used to shifting goods in bulk, but not individual items to people's homes," says Robinson.
Tesco decided to partner with Home Delivery Network, the biggest such network in the UK. With its systems Tesco is able to keep track on where a customer's order is at any given time.
"That's a really powerful tool for customer service - and they can give 96% next-day delivery," says Robinson. "Tesco has got the biggest home-delivery network for groceries in the world so why not use that for our small items and give customers a great service? All the carrier needs to do is drop the goods to the store and the order can then go out on the grocery delivery van."
The delivery charge for large items such as sofas and bedroom furniture is also £4.85, but ordering times are five to 10 days. Robinson is working to bring that down, but insists Tesco Direct is still ahead of its rivals.
"No competitor offers anything near that," says Robinson, who insists furniture stores have been getting away with poor standards of service for years.
"It really annoys me that you can buy a sofa and it takes 10 weeks to arrive. The furniture industry over the years has been quite content to not make the stuff until they have a hard order, but I know that customers really only choose three colours of sofas in a few styles, so we take the risk and have them ready for the customer."
Tesco Direct offers a better service all round, says Robinson, highlighting the fact that a reminder text is sent the day before delivery, a phone call is made an hour before the order arrives and the unpacked goods are checked.
"Tesco is raising the bar. We have taken a market and shaken it up to improve it for the customer. If our competitors are forced to come up to our standard, that's good for the customer."
One benefit of the Tesco system is that customers can order in a multiple of ways - by internet, phone or in-store via catalogue desks.
The desks are proving to be big winners. Tesco is in the process of rolling them out to more stores, both large and small. Robinson is excited about the potential to drive store sales through Tesco Direct. "There's a real buzz about Tesco Direct," he says. "Store managers realise there's good money to be made out of what's basically a broom cupboard."
He highlights a 26,000 sq ft store in Honiton, Devon: "The store does not have the space to sell a big non-food range, but now the opportunity is huge. Customers know our prices are good and if they are looking for a £900 camera, they are quite happy to come to us.
"They no longer need to go out to the nearest big town for items like that - with very little space given over to the catalogue, we have effectively become the department store of Honiton."
Of course there are plenty of challenges ahead. Making further inroads into high street and internet territory against a backdrop of mounting concern about Tesco's dominance won't be easy.
But Robinson says: "If prices are right, the product is right and service is the best, customers will shop with us - it's the simplest rule of retail." n
Q&A Who has inspired you most during your career?
I worked with Kate Swann at Argos and she was fantastic - I loved my time there. She's so passionate about what she does and that was so infectious. Geoff Mulcahy, chief executive of Kingfisher, was the complete opposite, but I was really lucky to work with him - he is such a retail legend. Some people say he was uncharismatic but I disagree. And then there's obviously Sir Terry - Tesco hasn't got where it is today without his great leadership.
If Sir Terry was feeling generous and offered you anything from the new catalogue, what would you want?
The swimming pool is pretty good, but I would definitely go for the ride-on mower. I'll leave the equestrian equipment alone.
Describe your typical day at work
I always start with an 8am conference call with all the different parts of the team. I'm quite hands-on. At the moment I am looking at plans for the launch, as well as the current trading. I'm a bit addicted to the refresh button on my computer so that I can get the latest update on Tesco Direct sales. We have no offices and I share a very small desk with Laura Wade-Gery (Tesco.com CEO).
What do you do in your free time?
I like to get the gym as often as I can. I've got a really good group of friends that I socialise with and I go on a couple of nice holidays a year. I've got my cousin's wedding coming up in Australia and am really looking forward to that.
Are you a catalogue shopping fan?
I used to get stuff from the Grattons and Freemans catalogues and bought from Argos when I was a teenager.