THETFORD (England): Standing with bags of groceries outside discount store Lidl in Thetford, eastern England, Jodie McGloughlin explains simply why she turned her back on Britain’s biggest retailer — its high prices.
“With Tesco ... all them pounds add up,” the 22-year-old mum says. “I think that’s what people notice.”
Tesco has issued three profit warnings in two-and-a-half years as McGloughlin and other former customers depart for discount rivals Aldi and Lidl. It has spent more than £1 billion (RM5.23 billion) to try to win them back with better-looking stores and product promotions but industry experts say the nation’s former favourite has a more fundamental problem to fix — that of shoppers’ emotional response to it.
“People no longer feel that Tesco is on their side,” said Marc Cave, who worked with the retailer for nearly ten years during its heyday.
“We, the British public, just don’t like it anymore. It’s a cold, commercial monolith.”
The world’s third largest retailer is in part a victim of its own success.
Founded in 1919 as a market stall in London’s East End where Jack Cohen could “pile ‘em high, sell ‘em cheap“, Tesco grew fast in the 1990s by expanding its range from basic food products at one end to “finest” top-of-the-range meals at the other — in the process more than doubling its market share.
Its “Every Little Helps” campaign mixed advertising with loyalty schemes and wowed shoppers by seeing to every detail: more tills opened when queues were long, extra staff came to help shoppers pack their bags and wobbly trolleys were fixed. So-called Clubcards registered purchases so that customers got promotions based on their weekly essentials.
But then came complaints that Tesco was too aggressive, gobbling up retail space and building out-of-town superstores that drove smaller businesses out of existence. At the height of its popularity, its annual results were being compared to the economic output of small countries by the financial press.
Those profits fell away fast after a long economic downturn made Britons rethink the way they shopped and Tesco — despite being renowned for its ability to gauge the British mood — took too long to respond.
“You’re seeing a resetting of values as a result of a period of austerity and a strengthening discounter retail presence,” said Russ Lidstone, head of ad agency Havas Worldwide London.
“The market has repositioned around Tesco,” said Tracy de Groose, the UK head of advertising group Dentsu Aegis Network. “I think they’ve lost their way. The brand is tired. The concept of value has changed.”
But value is not just about saving money. Before Tesco can persuade shoppers to come in and spend from their reduced budgets it must decide what it wants to be to them.
Fundamentally, Tesco needs to make shopping easier for its consumers than it presently is, Cave said.
That means raising its standards again, having more staff around the store, and squeezing the most out of digital and social media services in order to innovate and rebuild its relationship with its customers.
“Tesco needs to get back to an emotional relationship with its customers, not just a transactional one,” Cave said. Reuters