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In ten years Tesco has travelled from being the number three supermarket in the United Kingdom to the foothills of becoming a genuinely international business.

It is perfectly fair that people should ask why we are successful and what we are doing with that success. It is also fair that people debate whether supermarkets enhance or inhibit our lives.

My contribution to this debate is to explain how we at Tesco have got where we are – and how we run our business day-to-day. Put simply, we never forget that we are shopkeepers. We buy and sell goods and services. We listen very carefully to what our customers want and we try our hardest to satisfy them better than our competitors do. We know that our customers choose to shop with us and they could change their minds at any time. That is why we strive so hard to get things right.

Now that we are in 13 countries, employ 366,000 people, and serve around 30 million customers a week, it is more important than ever that we retain this straightforward focus. Our Core Values provide the framework within which everyone at Tesco works. We try to stay quick on our feet by avoiding unnecessary bureaucracy: we have a flat management structure – with six levels from me to the checkout, and one in ten staff in training for the next level at any one time.

We believe that our continuing success depends not on any new management system, but on what each member of staff does for each customer. We believe in leadership. But for us this means thousands of local leaders united by common values rather than a global blueprint driven from the centre. We take pride in growing local leaders who can shape our business around local cultures and local priorities.

Our Values characterise our approach to Corporate Responsibility. We believe we can achieve most when we work together on practical things that make a difference. ‘Every little helps’ can become a great deal when everyone pulls in the same direction.

Some aspects are worth highlighting as they say something about our overall approach and reveal how our size and success can bring benefits to customers, local economies, staff and the environment.

• Benefits to customers: in the UK our investment of over £230 million in price cuts has meant that an average weekly shop costs less then it did a year ago. This year we have also invested £56 million in price cuts in Central Europe. By keeping prices low, we particularly help those on lower incomes to buy fresher and better food. This year, for example, our sales of fruit and vegetables in the UK rose by over 12%, with the increase most marked among our customers on lower incomes.
• Benefits to local economies: supermarkets are sometimes accused of damaging the high street or affecting market towns. We are sensitive to these charges but the evidence often suggests precisely the opposite effect. We frequently reclaim derelict land, breathe life back into communities through our ‘regeneration partnerships’, and act as a magnet for other town centre stores. Over the past six years we have helped over 2,000 long-term unemployed and disadvantaged people back into work through our job guarantee scheme. This year we opened our first regeneration store outside the UK in Ireland.
• Benefits for staff: with 366,000 employees around the world one of our Core Values is to treat people how we like to be treated. In the UK our rates of pay, pensions, bonuses and shares are industry leading. Through training, jobs become careers for thousands of our people. For example, in Poland, 100% of store directors are of local origin.
• Benefits to the environment: recycling and energy efficiency are key issues for us and for our customers. We are constantly looking for ways of improving our own performance and of helping our customers to do more. This year, we introduced Britain’s first fully automated recycling machine which makes it even easier for customers to recycle. In Thailand, over the last three years, we have invested £3.1 million on energy conservation at 49 Lotus stores, resulting in energy savings of £2 million so far.

Our success derives from a genuine partnership with our many stakeholders. It is a relationship built on trust. For us this is a commercial as much as a social imperative – to do the right thing and, in so doing, continue to be successful.

Sir Terry Leahy Chief Executive