Matt Davies

Matt Davies

Tesco has called on suppliers to launch a new wave of innovation across its produce offering, in a move that will involve refreshed stores “celebrating” fresh food.

Speaking at the IGD Tesco Business Update, to an audience of about 1,600 suppliers at Wembley Stadium, Tesco’s management team said now it had finished with its Project Reset range review, the next phase of Tesco’s fightback would be based on improving its core fresh offer.

“We’re refreshing a significant number of stores to celebrate our passion for fresh products,” said UK CEO Matt Davies.

And Tesco threw down the gauntlet to suppliers to come up with new innovation that, following a major reduction in SKUs in the past year, will seek to put Tesco back on the front foot.

Cashback: Lewis set for big payday

Dave Lewis is expected to receive a cash-and-shares bonus of £3.15m this year - the maximum available to him - after putting Tesco back in the black for the first time in three years. According to reports, he could stand to receive a full salary of well over £4m when combined with his basic pay of £1.25m.

Lewis came out as the highest-paid CEO of the top 10 UK food retailers in an investigation by The Grocer. In his first seven months in the job, he received £4.1m, which included a £3.3m bonus to buy out share options.

CEO pay at the top 10 UK food retailers increased by an average of 16% versus the previous year.

“They feel that they’re done with the cutting of the crap and now they want to look to a new phase of innovation,” said one supplier. “They were leaning quite heavily on suppliers calling on people to bring innovation to the table.”

Tesco confirmed at the event there would be a phase two of Project Reset with a further simplification of its range, but claimed the focus would be on new ideas from suppliers.

“There was a call to arms for innovation and the message was that if you’re a big supplier, then open the doors to your ideas for big innovation, but if you are a small supplier our door is open and we have the capacity to move quickly.”

Tesco’s chief product officer Jason Tarry also announced new moves to improve relations with smaller suppliers, with a new team dedicated to helping new suppliers in their first six months working with Tesco.

One supplier said: “I do think in the past year Tesco have shown in their dealings with suppliers that they are walking the walk as well as talking the talk. They are more approachable than they have ever been.”

Tesco’s role in the health debate was also a major focus of the event, with the retailer having aligned itself with Action on Sugar in a cull of high-sugar products across its drinks range and having promised to continue the recipe changes across other sectors.

Matt Simister, commercial director of fresh food and commodities, told suppliers the war on sugar did not mean ideas for innovation would be rejected just because products might be unhealthy.

“He was asked what happens if a supplier comes to Tesco with an idea which doesn’t fit with its health agenda,” said one supplier. “The message was very strongly that if it is a product which is an indulgent treat then Tesco will still back it.”