Tesco Flowers

Tesco Flowers come with great offers and delivery options.

The amazing growth of Tesco Flowers, the flower selling arm of Tesco PLC, is largely due to the ability of Tesco to reinvent itself. The following essay looks at the establishment and growth of Tesco flowers as a business concern.

Tesco flowers - the reinvention of Tesco

Successful companies come in three distinct models: replicators, performance managers, and reinventors¹. Tesco definitely falls into the reinventor category. This has enabled it to invent new marketplaces, like Tesco Flowers and Tesco Books. For instance, Tesco has reinvented standardized behind-the-scenes and back-end processes and systems for the flower marketplace. Tesco Flowers has captured a large share of the flower marketplace through Tesco's ability to understand new markets and adapting formats to fit them. Linking newly adapted formats to a standardized back end takes time, but time than starting from scratch.

• When introducing Tesco Flowers, the company had to first find out exactly what the consumers wanted.

Tesco Flowers uses the same systems for inventory management and merchandising that it uses for food and household goods. It has so much experience adapting system interfaces for different kinds of goods that adding Tesco Flowers to the system was almost a doddle. If you look at the Tesco Direct web site you will see many categories of goods all tied together by the same interface. The universality of the interface is  good for the users--once they have learned the interface for buying books they can easily use the almost identical interface for buying flowers. But this similarity also makes the system developer's task much easier. It means previous systems and  interfaces can be quickly adapted to current needs.

Tesco, like most companies, uses a system for sharing knowledge to improve the performance of the business. Such a system is usually divided  into knowledge areas, like IT, category management, logistics and distribution, and store operations. The buying and merchandising knowledge area might link together groups covering flowers, meat, delicatessen, and bakery products. So in moving to selling flowers Tesco Flowers could use Tesco's vast knowledge base on handling perishable goods.

Tesco's management expertise means it is used to defining key performance indicators and best-practice benchmarks that can be reinvented for particular activities. For instance, Tesco Flowers might choose the number of popular, expensive flowers sold from 9 AM to 1 PM as a key performance indicator and specify the best-practice sales volume. This performance metric could show the relative performance of each flower department around the world, though flower varieties might vary.

Tesco Flowers imports flowers

Stricter quality standards for flower production are emerging in developed countries, the original main source for Tesco Flowers. This can make it difficult for developing countries to gain access. The primary objective of these standards is supposedly to protect the health of consumers in developed countries. But it also has the effect of reduced market access for small-scale producers in developing countries.

At present, quality standards are driven by large retailers. For instance, EUREPGAP (Euro Retailers Produce Working Group Good Agricultural Practice) is a code of practice developed by Tesco and other large European retailers. On the EUREP web site it says, EUREP is "providing a common language on food safety and environmental protection as well as a level playing field in a highly complex and competitive fresh product distribution chain".

EUREPGAP has been analysed² using Schmid's (1987)³ institutional-impact analysis paradigm -- situation, structure, and performance (SSP). The situation involves the human interdependencies underlying a particular good. This shows EUREPGAP, and therefore Tesco Flowers, severely limits export market access for small-holder flower producers in developing countries. Small-holder farmers are typically linked to exports through outgrower contracts. But, to meet EUREP's requirements of  of traceability and pesticide records, many flower exporters are terminating contracts with small farmers.

An alternative is provided by bottom-up initiatives from standards bodies like COLEACP (Committee for Liaison between Europe, Africa, the Caribbean and the Pacific) that takes into account the peculiarities of flower production in developing countries. Codes of conduct have rules governing the farmer-exporter relationship. The exporter is held responsible for helping farmers comply. For developing countries, the COLEACP Harmonized Framework provides greater market access and a fairer cost distribution and participatory process than EUREPGAP.

Conclusion - the market for Tesco Flowers

There is no doubt that Tesco Flowers offers a highly efficient and cost effective way for the consumer to obtain flowers for many different uses and occasions. But the ethical consumer should look closely at the impact of their buying choice on developing nations and, perhaps, consider purchasing their flowers from a company backed by COLEACP standards, rather than EUREPGAP standards.

[1]Luciano Catoni, Nora Forisdal Larssen, James Naylor, and Andrea Zocchi, "Travel Tips for Retailers: Three Strategies Can Help Retailers Expand Abroad. the Trick Is to Choose the One That Best Suits Your Particular Ambitions and Your Starting Point," The McKinsey Quarterly, 2002, p.2174
[2]Patricia Aust Sterns, and Lawrence Busch, "Standard Setting in the African Horticultural Export Market: A Bottom-Up or Top-Down Approach?," Journal of Economic Issues 36.2 (2002)
[3]Schmid, A. A. Property, Power, and Public Choice: An Inquiry into Law and Economics, 2d ed. New York, N.Y.: Praeger Publishers, 1987.

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