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  • 14 Thu

    Tesco – Every little cut

    Is this a sign of more trouble for the market leader as Tesco announced earlier this week its plans to sell off more of its non core assets?

    Despite their once flourishing product portfolio the chief executive, Dave Lewis wants to bring the attention back to the supermarket base in an attempt to revive sales.

    Parts of the coffee chain Harris + Hoole, restaurant chain Giraffe and garden centre Dobbies are the next assets to begin closing.

    This is amid other cuts that led to their fleet of multi million pound private jets to be sold off summer ‘15. Alongside the £4.2b South Korean Homeplus business and selling off 14 sites across London, South East and Bath to investment firm Meyer and Bergman for £250 m.

    It seems Tesco lost control of their core offering as they tried to diversify and enter new markets.

    However, the company failed to observe and adapt to the change in consumer behaviour. The rise in online shopping due to convenience and lack of interest in visiting the larger stores due to the sheer volume of choice could be what has deterred consumers.

    The companies slow responsiveness to Aldi and Lidl’s’ Christmas campaigns, which showed quality, value for money products, allowed these underdogs to gain the upper hand. These retailers stock a limited range of less than 2,000 products which gives them a lot of buying power due to reduced costs and allows them to offer competitive prices.

    Even after pulling a third of the products off the shelves early last year the value for money brands are still increasing in popularity with consumers as a result rising in market share.

    After publicly overstating profits of £263 m in 2014 due to underachieving profit targets and the infamous horse meat scandal back in 2013, have had a profound impact on consumers trust in this brand which has reflected in their sales and market share.

    If Tesco really do want to regain the trust from consumers they need to efficiently respond to rivals offers and marketing strategies. Instead of focusing on low low prices, Tesco should follow in the arms of Aldi and Lidl and focus on the quality. They also need to invest in their customers to retain their current consumer base. Investment in innovation and technology will give them the upper hand in regards to leadership in the market. Currently they have been slow at introducing new technology having previous dismissed the use of contactless payments in 2013, due to working on their own mobile phone wallet, finally converting in 2014 once popularity rose with other retailers.

    In an increasingly changing retail landscape, success will come from being able to predicting what the customer’s needs will be and being agile enough to meet them.  Although they have a long way to go the recent reduction of operation shows they are on their way.

    What are your thoughts and opinions on Tesco as a brand? Can they regain trust and lead the market? Comment below or let us know on Facebook and Twitter.

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