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KRISHNAN GURU-MURTHY: Matt, first of all, from Tesco's
point of view, what is the impact of the internet on
Tesco, which is a vast scaled business that relies on masses
of stores as people get used to shopping online?
MATT ATKINSON: Well, I think the impact has been really
significant, and all of you will have noticed the
evolution and changes that we've made to our core
business over the last couple of years.
And I think you can talk about the impact in lots of
different ways.
So I think the first is a reconfiguration of our
business to serve that new, connected customer.
So what we're finding is that increasingly, the customer of
today is shopping across a range of different
environments and formats.
So what we're starting to do as a business is to think
about what that means into the future.
That means new services, so things like Click and Collect.
That means adding value to our existing store footprint, so
larger stores have to become different experiences.
And it also means that we have to put new skills into our
business to enable the people we employ to make a difference
to that customer.
So I think the key thing for us, really, is how do you
embrace and join up the world?
Increasingly, the customer is joining up on their own basis.
And of course, that's exciting, but it also presents
lots of challenges as you try to think about how do you
retool your talent?
Where do you invest your capital?
How do you do the things that matter to ensure that you stay
relevant over the next 10 years?
KRISHNAN GURU-MURTHY: And what does it basically
mean for the stores?
I mean, haven't you ended up halting a big store build?
MATT ATKINSON: Yeah.
Yeah, we did.
We made a choice to slow down our expansion plans.
And that's really about where do you
want to put your capital?
And increasingly, what we're trying to do is balance
concrete versus the cloud, which is that what we've
decided to do is to try and take the money that we have,
and valuably invest that in the assets
that we already have.
KRISHNAN GURU-MURTHY: So you're going to be warehousers
rather than shops?
MATT ATKINSON: No.
KRISHNAN GURU-MURTHY: Is that where the jobs
are going to be?
MATT ATKINSON: No.
It'll be a blend of things.
So increasingly, what we're doing is rolling out things
like Click and Collect.
So it means rather than somebody being in the store,
they'll be in a Click and Collect center serving a
drive-through customer who's doing that because it's more
convenient.
It might be that somebody is powering a more connected
customer service desk.
So it's about new skills on the basis of
that customer we see.
So what we have to do is we have to think about the money
we've got and try and reallocate it into those
assets that we've got to reconfigure them so that
they're right for the future.
KRISHNAN GURU-MURTHY: And does that mean a more skilled
workforce, or just different skills?
MATT ATKINSON: I think it's a mixture of both.
We're quite a broad business in the sense that we need new
skills in technology and search and mobile.
That's why we've invested in building this new technology
capability in London.
We need new skills in the call center to deal with the
connected customer, and we need new skills in store to be
able to serve that customer.
So it does mean we're recruiting another 20,000
people in Britain this year.
KRISHNAN GURU-MURTHY: But is that less?
MATT ATKINSON: And they're going into different--
KRISHNAN GURU-MURTHY: But it would have been, had you gone
ahead with these 100 stores?
I mean, what is the impact on the number of
people you're hiring?
MATT ATKINSON: No, I mean, if you looked feasibly at the 100
stores and you rolled forward, it would have taken some time
for us to build them.
So 20,000 jobs is more than we would have planned to do, and
it's just about making sure that those jobs go into our
current design in a way that's helpful based on where we see
the future.
KRISHNAN GURU-MURTHY: Julie, let me just bring you in at
this stage.
Your business model is really interesting.
Just tell us about it first, because you
started as an online.
JULIE DEANE: I think you're flattering us to say we had a
business model.
What we had is something that I think a lot of people can
relate to, and that was I really needed to make money to
make my family's life better, and I wasn't going to look to
anybody else to fix that.
So I needed to start a business that would mean that
my children went to a fantastic school, and that was
my mission.
I had 600 pounds, eight weeks, and a computer in the kitchen.
So we didn't really have a business model.
KRISHNAN GURU-MURTHY: Well, tell us what happened then.
You started selling online?
JULIE DEANE: Yes, started selling online--
KRISHNAN GURU-MURTHY: And now you've got a shop.
JULIE DEANE: --because I had a Google AdWords voucher that
fell out of a magazine.
So it's 50 pounds.
So who's going to turn their back on that?
So it's a way into the advertising world that's very
accessible.
And I read this great book, "Guerrilla Marketing," and it
said that I needed to find five different ways to
approach with--
this is probably awful for somebody who knows about
marketing to see how hacks can get into these sort of things.
MATT ATKINSON: I think you probably do know quite a lot
about marketing.
JULIE DEANE: And I used the home printer to create little
leaflets to leave at doctors' surgeries and school places.
And I went on every free directory on the internet that
I could find.
And I set myself a goal of--
well, first I had to create a website, and I did that with a
free online Microsoft course.
Two nights to do the course, third night to do the website.
And then I emailed 300 emails a day, which isn't really as
hard as it sounds because there's that whole cut and
paste thing going.
So you've got newspaper editors and lifestyle editors
and fashion bloggers, and if you're really determined
enough-- and for me, it was about my children, so I was
really determined.
I was like a ferret going after this thing.
So not many people got away from the Cambridge Satchel
Company marketing campaign.
KRISHNAN GURU-MURTHY: But you've now opened a shop.
JULIE DEANE: Yes.
KRISHNAN GURU-MURTHY: What is the real point of that shop?
Is it to sell satchels, or is it part of your branding and
marketing now?
JULIE DEANE: That's right, because now, it's four and a
half years, not even five years old, and that 600 pounds
has created turnover of 15 million a year.
So part of it was, for us, I'm very determined to keep all
our manufacturing in the UK.
That's nonnegotiable for us.
And so I needed to make production easier to handle.
And luckily, I came across somebody who knows all about
fashion and could really fill a deficit in what we knew, and
he said that all the big fashion houses go to this
forward ordering things.
That's why they had fashion weeks.
I didn't know that's why they had fashion weeks.
But that's why they have fashion weeks, because then
all the big buyers go to one place and you can meet them,
get your ordering, and get all your production scheduled in
an easy way.
And so it became quite expensive for us to try and
get a presence at fashion weeks.
And so the amount of money that I was going to spend on a
showroom during all of the fashion weeks in London, that
just about covers the rent that we pay on our Covent
Garden store.
And so--
KRISHNAN GURU-MURTHY: So it is exactly the inverse position,
isn't it, between the two of you.
Because on big, established stores like Tesco, the online
store was a relatively small thing that is now growing.
And for you, the physical shop is presumably--
what's the proportion of sales, if you like, between
online and the physical shop?
JULIE DEANE: Our London shop that opened just before
Christmas, it is almost matching our website.
I mean, we had very low targets that we needed to
reach to have it work, but we're getting five times what
we set for the store.
We've even had the CEO of J. Crew and his entourage in our
store, and it's a really, really small store.
But I think that when your resources are a little more
scarce and you think about money as something that isn't
going to go to this department and that department, you need
to make it work.
And so it's a small store, but it's brilliant.
KRISHNAN GURU-MURTHY: And how many people do you employ?
JULIE DEANE: We now have about 93.
KRISHNAN GURU-MURTHY: And how do you divide that--
JULIE DEANE: They're not in my kitchen anymore, thank god.
KRISHNAN GURU-MURTHY: How do you divide that between online
and the physical shop?
JULIE DEANE: I started a factory to keep up with
demand, and so about half of them are in the factory.
And then we've got about 30 or 35 that are in Cambridge.
And we don't really make that much distinction.
KRISHNAN GURU-MURTHY: OK.
Tom, where does this leave you?
It's not as simple as the internet is bad for jobs.
TOM WILSON: No, not at all, actually.
In some ways, it's much more complicated than that because
actually, I think that the trend across the entire
economy is for jobs to become more skilled, more qualified,
but not necessarily better paid.
And that's really where the trade unions come in because
part of our job, I think, is to, on the one hand, help
people to gain those qualifications--
not least so that they can work in this new internet age,
for example, with Tesco's--
but also to make sure that when they do, they're properly
paid and rewarded for that.
So it's a very interesting time that we're living in, I
think, because unions are really doing far, far more in
this whole area of learning and skills than they've ever
done before.
Last year, for example, Unionlearn, the organization
that I run for the TUC, introduced about a quarter of
a million people to learning who would not have had those
opportunities to learn but for their union.
Now, a quarter of a million is equivalent to a good number of
colleges and universities.
And we're doing that quietly, just getting on with it,
working with employers like Tesco's, by the way, which is
a very good employer on this and has a good, strong
relationship with their trade union, USDAW.
But part of what that's about, I think, is creating, on the
one hand, the appetite and the opportunity to learn those new
skills, but on the other hand, trying to encourage and
support and help companies to be a bit more imaginative, a
bit more ambitious about the kind of jobs and the kind of
business model that they're prepared to offer.
KRISHNAN GURU-MURTHY: And do you think high street jobs are
going to go?
And if so, when?
TOM WILSON: No I don't, actually.
If you look at the high street, it's changing
radically, but the kinds of jobs that people do there,
they're certainly changing radically too, but there are
still jobs on the high street.
But they're doing very different things.
So for example, there used to be perhaps a cafe that was a
bit of a greasy spoon.
Now it's not like that.
It'll be a much more high end cafe selling different kinds
of coffees and all the rest of it.
It might well be a Wi-Fi free zone internet cafe.
So the people working in that cafe will need far more skills
than when they were just serving bagel and eggs and a
mug of tea or something.
KRISHNAN GURU-MURTHY: And is that realistic?
Is Britain where it needs to be to deliver those skills?
TOM WILSON: No, not yet, but it's getting there, I think.
And it's getting there, I would say, partly with the
strong support and help of the trade union movement, which is
across the country working with employers who want to
raise their skills and raise their aspirations in this way.
KRISHNAN GURU-MURTHY: OK, you like Tesco.
What do you think about Amazon?
TOM WILSON: Well, we wish they'd pay their taxes.
By the way, I'd say the same about Google.
You wouldn't expect somebody from the TUC not to say that,
and I'll say it loud and clear, that we do think Google
should be paying the taxes.
So should Amazon.
KRISHNAN GURU-MURTHY: Which taxes do you
think they should pay?
TOM WILSON: I'm not qualified to get into that debate.
But what I would say is I would endorse what Ed Miliband
just said, which is that a company that's making billions
should be paying in taxes in this country, a somewhat
higher proportion than it currently is.
I don't know how exactly that's done.
One thing I would also say is that the thousands of people
who work for Google in this country and do a great job and
are proud of the work they do-- and it is a great company
in many ways and they do a great job--
they, too, want to work for a company that is socially
responsible.
KRISHNAN GURU-MURTHY: But I mean, in terms of employment
practices and the kinds of jobs that are available, if
you take a company like Amazon, and if shopping is
moving that way generally, there will be other entrants
into big warehousing type models where there's no
physical shop, what does that mean for the workforce?
What does that mean for school leavers at the bottom who
would normally go and look for the job on the till?
TOM WILSON: Well, I think it's a very good question because
the reality is that there are very, very few jobs left in
this country which are open to people with no qualifications.
Very few.
Almost any job you can think of requires at least a Level
Two, which is roughly equivalent to GSCE.
And very often, that kind of skill level is associated
with, say, customer service or handling the internet or
managing computing in different ways.
So to come back to your question, the really important
thing is that we equip young people with those skills
before they enter the job market so they've got a good
chance of getting a decent job.
And when they're in the job market, working for Amazon,
working for other companies, they then have opportunities
to move on, to progress, to grow.
And that's partly because the trade union movement strongly
supports people who want to move on and up in work, but
also because jobs change, and it's really important that
that appetite, that flexibility, that adaptability
for change continues throughout a
company's working life.
KRISHNAN GURU-MURTHY: Henry, let me begin with you with a
question from the app.
And do use this, by the way.
I will use them.
And identify yourselves, if you will.
It was actually referring to what Matt said, which said
Tesco was slowing its bricks and mortar expansion.
We have to assume this will happen for all retailers and
lead to a property disinvestment.
What future for the high street?
Is it an exhibition space?
HENRY MASON: Well, I think it's interesting because
people are-- and as trend watchers, we're
guilty of it as well.
We love to fetishize the new, and suddenly, e-commerce is
going to sweep away everything that was before.
But of course, we've heard it's not.
Julie's opening a store.
Google are rumored to be opening a store as well.
Amazon, also rumored to be opening physical stores.
And of course, there's a shift, but I think this idea
that e-commerce is suddenly going to decimate the high
street and it's only going to be latte bars and people
working on their laptops is a bit of a simplistic one.
And when we look at consumers, how consumers have been
changed by e-commerce, because of course, they have been
changed by e-commerce, consumer expectations have
been changed.
When you go into a store, you're not just looking to buy
the product.
You can have all this information.
You can pull out your phone and get price comparison, you
can see if it's a good product, you can check out
those reviews.
It's a lot easier to bring those online expectations into
the physical world and for consumers in the store to have
all of that information that they used to online.
It's a lot easier to bring that into the offline world
than it is for online retailers to replicate the
physical world.
Do you see what I'm saying?
So there's a reason why online retailers want to get onto the
high street.
It's because there are certain elements of that shopping
experience--
the touch, the actual experience--
that you can't recreate.
Have you ever been on an online 3D store where you can
walk around in your web browser and look at products?
They're terrible.
KRISHNAN GURU-MURTHY: So what you are saying is that the
high street does become basically an exhibition space
and a showroom where you can go and touch and see and try
things out?
HENRY MASON: Well, it shrinks, but it's not purely.
I think this idea--
Tesco's famous for the--
KRISHNAN GURU-MURTHY: I mean, not for food necessarily, but
for satchels and electronic goods and anything else.
HENRY MASON: Well as Julie said, they're doing sales
nearly matching the website.
I think that's fascinating.
MATT ATKINSON: I don't think that's what we see.
So going back to the question about property disinvestment,
I don't think that is the case.
I think it's just a change in the way that
you spend that money.
So on one hand, we're seeing the rise around the world of
experiential shopping.
You want to go to somewhere, you want it to be nice, you
want to perhaps have lunch there, have a coffee, and you
want to browse for some great product.
And environments like that actually are growing.
The question for us is that we don't have enough environments
like that, so we want to put more money into creating
spaces like that that actually make a difference and
contribute to the environment in which they're in.
And then on the other hand, what we're seeing in the high
street is the rise of convenience.
And what we find is where you have a high street that's
vibrant, it's got a good convenience offer and it's
surrounded by great companies, then it grows and it prospers.
So I think the point is that what we have to do is we have
to hold those two things in our hands and
do them both well.
And clearly, doing them will require new sets of skills.
We'll need new design skills.
We'll need new technology skills.
We'll need new fabric in our stores to help the customer
get what they want.
So it's much more a case of reinvesting the money based on
what we see, and what we're seeing is that both of those
things are increasingly happening around the world and
very much in the UK as well.
KRISHNAN GURU-MURTHY: This morning started with the
bionic man.
MATT ATKINSON: Yeah.
KRISHNAN GURU-MURTHY: If you put all this together, would
you ever put robots into Tesco?
The front of house?
MATT ATKINSON: Somebody might say we already have them.
[LAUGHS]
HENRY MASON: Isn't self-checkout
making us the robots?
KRISHNAN GURU-MURTHY: That's quite close to the Gerald
Ratner comment, isn't it?
[LAUGHTER]
MATT ATKINSON: I thought I might say it before you did.
KRISHNAN GURU-MURTHY: I wasn't going to say it, but
I'm glad you did.
MATT ATKINSON: I think the point is that we already have
technology in all our stores and great
people in all our stores.
KRISHNAN GURU-MURTHY: That's too late now.
[INAUDIBLE].
MATT ATKINSON: No, no, but think about this.
Think about this.
So we have self-checkout at the moment.
So self-checkout is a way of enabling the customer with
that mission to get in and out of the store really
efficiently and really effectively.
But what we also find is that most people-- and I would
hazard a guess, most people in this room-- also like, on
occasion, to get great service from a human being.
And it's the blend of those two things that
I think we'll see.
And whether that means that the self-checkout becomes more
intelligent, more helpful, that it talks to you or
recognizes you, I think that that's a likely outcome of the
technology that we're seeing.
KRISHNAN GURU-MURTHY: Are you relaxed about automation?
TOM WILSON: Well, I think part of the problem is that lots of
people who work in stores, including Tesco's and others,
feel that they are treated like robots and that they have
to work in very, very limited and constrained ways,
according to the tick tick boxes.
And one of the great things about technology is it
liberates people from that and it allows people to be much
more creative and perhaps have an expanded job role, which is
more interesting.
And the automated checkouts is a really interesting--
KRISHNAN GURU-MURTHY: I'm not sure if your job in an
internet business is to go and get the thing off Shelf 37B.
TOM WILSON: But that's the point.
Those jobs are changing.
And if you look at Tesco's, to take the example of the
automated checkout, people used to work on a checkout,
simply scanning items.
It's a pretty boring job.
Now, they've got a much more interesting job looking after
a number of those small machines that do the automatic
instant checkout.
And they're helping people, talking to people
in different ways.
Frankly, it's a more interesting and it's a much
higher skill job.
KRISHNAN GURU-MURTHY: Julie?
JULIE DEANE: Let me just ask a question.
I think it's more dangerous when we start treating our
customers like robots.
I think that's the thing.
One of the reasons why we've done so well is we engage so,
so heavily with our customers.
From the early days, if somebody ordered from my
website, I'd be all over that email address, seeing where
they worked and writing and saying, can
you spread the word?
Are there other people like you that might like the bags?
And then after sending the bag, saying, did you like it?
Where did you wear it?
Do you want to send me a photograph?
And we engage so heavily with our customers that we have
such a strong and loyal following.
When they come into the shop, they try it on and if the
strap is too long, we just put another hole in it for them.
But we don't think that there's going to be one bag,
just come in, get your bag, get out as quick as you can.
That's where we learn about our customers.
HENRY MASON: That's what Tesco's are trying to do.
They're going to track me down.
MATT ATKINSON: Well, that's the point between Tom and
Julie, which is if you use the technology to free the
colleague to serve the customer better, you get a
better outcome.
And that's the way that we're thinking about technology is
to try and unlock somebody in the store to be able to do
what matters for the customer to be more helpful, to serve,
to listen, to understand, to know more about wine, to know
more about [INAUDIBLE].
And that, I think, is what technology is
going to help us do.
Not, I think, to automate things that we think can
create more efficiency in the store and remove the contact
that's an important part of the shopping trip.
It's just not the way we see it, I don't think.
KRISHNAN GURU-MURTHY: Henry, someone asked who watches the
trends in Trendwatching, and how do we avoid groupthink?
HENRY MASON: So Trendwatching, our business model, I guess,
has an interesting parallel to this.
We have a network of people all around the world who send
us tips, basically, spotters, we call them, about 2,500.
And it's interesting because we pay them, basically, in
Amazon points.
They can redeem it for Amazon vouchers.
They can redeem it for iPads, Kindles, things like that.
And I think I was at a conference a few weeks ago
looking at the sharing economy and collaborative consumption,
and that's another huge trend, being able to rent out excess
space in your house, rent out your car.
And someone made a comment there, in the past, people had
one job for seven years or longer.
Now, you have seven jobs in your career, and people in the
future will have seven jobs at the same time.
And this notion of a job will become increasingly
fragmented.
You will be able to earn money from your interests, from your
assets, if you have something you can rent out when you're
not using it.
So I think this idea that jobs will become something that is
just given to you, that you turn up and you work 9:00 to
5:00, jobs are often things you can take,
as Julie found out.