Andrew Higginson: finance and strategy director, Tesco.
| Position | Interview |
It's pretty unusual for an FD to be director of strategy as well.
I'm not sure whether other companies do it or not, but my role is a broad-based business one rather than that of a technical specialist who just keeps the score. Obviously, everyone on the board is involved in strategy, but I'm the one who pulls it all together.
And what strategies are you pulling together at the moment?
The business is growing very fast. We expect it to increase by another 20 per cent this year and we're also putting 2.5bn [pounds sterling] into capital investment across the world. A lot of this is going into international development. With that comes a lot of extra responsibility. In some countries we are one of the biggest employers outside the government. The management of all this is quite significant, as you might imagine.
"Quite significant" doesn't really do justice to all the work you've been doing.
The new international financial reporting standards have taken a huge amount of work. The biggest challenge is communicating the changes to shareholders we held a briefing day last month for the City on our restated 2004 accounts, for example.
We need to make clear what the underlying performance of the business is during the transition period. The devil is in the detail: on a net basis, there is almost no change to our reported results, but individual lines on the P&L can move a lot. For example, charging employee share options could "cost" us 50m [pounds sterling], as we have a large save-as-you-earn scheme with more than 100,000 employee shareholders. Conversely, not amortising goodwill would "save" us 50m [pounds sterling].
Tesco holds almost 30 per cent of the UK food retail market. Your nearest rival, Asda, has only 16 per cent. What's your secret?
We stay paranoid! We have to assume that they're all out to get us, so we try to do a bit better than all of them. 1 don't mean to sound glib, but ! think our motto, "every little helps", is the best way to explain it. There's no eureka factor. We work on much the same economics as everyone else in this business in terms of land, labour and logistics costs, and we're all selling the same gear. What we do is add a little bit extra: things such as making parking a bit simpler: making sure that our prices are a bit lower: and making sure that the queues are a bit shorter. All these things combine to create the right kind of shopping experience. This is how we will continue to differentiate ourselves from the...
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