Tesco recently announced “the worst domestic like-for-like performance in over ten years”, with sales down 3.7%, according to this report
. The brand’s problems run deep, shown by declining like-for-like sales in 10 out of the last 13 quarters.
The reasons for this dramatic decline are complex. But loosing sight of what made the brand famous is the first place seems to me to be one important reason.
During Tesco’s long period of growth, the brand was clearly focused on making shopping easier and more affordable for everyone, nicely summed up with the idea “Every Little Helps”. The brand didn’t have one single killer benefit. Rather, Tesco did a great job on a whole number of things, including being brilliant at the basics of the shopping trip. Key performance measures had simple attributes that were simple, but important, such as “I can get what I want”, “I don’t queue" and “The aisles are clear”. Tesco created a stream of core renovation in these areas, such as the “One in front” system which ensured extra staffing if queues got longer than two people.
Furthermore, for about 10 years Tesco had a comms campaign featuring a shopper called “Dotty” (below) that promoted these services in a distinctive way, creating “fresh consistency”. This campaign's 10 year run to 2004 "was estimated to have generated £2.2 billion for the brand.", according to this source
So, if this is what made Tesco famous, what has happened in the last few years? During this time Tesco has faced some big challenges, including the economic recession and the rise of the discounters, Aldi and Liddil. But it has fared worse than some of its competitors, especially Sainsbury's.
Lack of relevant renovation
Its hard to think of major Tesco renovation initiative from recent years. It was first with “Click and collect”, where you order online and pick up in store. But beyond that? It does seem that the brand waited to long to renovate, as I first posted on back in 2012, here
In contrast, Sainsbury’s launched “Brand Match”
, the first system to match the price of branded goods versus prices in other supermarkets. And Aldi have done a great job of delivering excellent, “brand leader” quality at affordable prices, including wagyu beef and champagne.
I do wonder about Tesco’s focus on its core consumers. When I worked on Tesco several years ago, Terry Leahy told me to ensure we did our research not in London, but rather “up North”. We followed his advice, and I ended up back in Sheffield, where I spent my teenage years. I met many people who relied on Tesco to help them provide the essentials for their family, with good quality at an affordable price.
However, looking at some of Tesco's recent initiatives I wonder ebout the relevance for these core customers. First, there is buying a share of upmarket coffee shop chain Harris+Hoole. In the same vein, there is the acquisition of the Giraffe chain of family restaurants, that I posted on here
. The idea is to put these restaurants and coffee shops in out-of-town stores, to help turn them into “retail destinations”. But will a trip to Tesco ever be a day out? And anyway, most of the restaurants Tesco now has to manage are on the high street, not in Tesco stores. And neither of these service offers are Tesco branded, so they don’t directly help rejuvenate the Tesco brand.
Second, there is the move into high-tech, with the launch of the Huddle tablet, and the purchase of the Blinkbox streaming service. Here, you wonder if an easier move wouldn’t have been selling better known brands at affordable prices, rather than trying to become a technology product and service provider?
Finally, there was the VIP catwalk show held at Somerset House, home of London Fashion Week, for Tescos' F&F sub-brand. Again, I wonder about the relevance of this initiative to cash-strapped Tesco shoppers. Also, the Tesco brand is again invisible, with F&F centre stage.
Lack of distinctiveness
I struggle to recall much of Tesco’s advertising from the last four to five years. I posted here
on some of the strange advertising the brand introduced, including singing Furbies. The brand lacks a distinctive campaign concept that it can use to tell a series of “chapters” about relevant service offerings in a consistent way. In contrast, Sainsbury's have hit the right nerve with their "Live Well for Less" campaign. And Aldi have a distinctive comms campaign
with the idea "Like brands. Only cheaper", that has some of the down-to-earth humour Tesco used to have.
In conclusion, it seems to me that Tesco needs to remember and refresh what made it famous. It could sell its stake in the coffee shops and restaurants. Forget fashion shows. Partner in technology. And re-focus on making shopping affordable and east for everyone.