Tesco – A look at the past – Part 1

Intriguing that both Andrew Higginson and Terry Leahy were compelled to speak about the past regime of Phillip Clarke in the past week, noting phrases such as ‘corporate vandalism’ as an example.

The results speak for themselves, the behaviour from a casual observer on the fringes also speaks for itself. Running a FTSE 100, blue chip company without a CFO for even days is unbelievable, but is exactly what happened towards the end at Tesco. Financial / ongoing court cases aside, there was so much wrong with the chain from a customer perspective. 

All this with reduced hours in store, but the number of head office teams was through the roof. Hence all the initiatives that were pushed in by people justifying what they were doing, without actually considering if the store had any chance of executing it (often, they didn’t).

I never blame the stores, there are some examples of ‘must do better’ but broadly, the central offices should consider the customer first, always but the colleague, responsible for implementing / changing / executing is a close second. Otherwise you do not have an initiative or idea and should be sent back to your desk to rethink.

Looking back on the archive, it’s truly amazing what had gone on, just how bad things were and all this with a backdrop of discounters being absolutely rampant with growth.

Perhaps what shaped this lack of action was the fact that none of the other big retailers (bar Asda ironically) were really doing much to address discounters. Only Sainsbury’s had really maintained share, Morrisons had gone down a strategical route of convenience and fresh expansion without having either the sites or the demographics to support.

Asda (in the news this time last Saturday!) had launched price lock and were definitely understanding the mood of the nation, with price lock reassuring customers on value and some strong promotional deals to underpin.

They were having a good time of it, however, perhaps crucially when you look back in the fullness of time now. Walmart, themselves under new leadership with Doug McMillon (commencing 2014) were starting to look at their US business and realising things had to change thus affected Asda.

The US business started to make investments that meant the rhetoric at Asda shifted to delivering the £xxxm profit for the US division, despite the momentum being with Asda at the time. A price gap existed of c.7-8% back then, but external monies were needed to push it further.

The shifting priorities for Walmart meant that Asda lost their momentum just as Tesco (2014) and Morrisons (2015) had new leaders and both commenced their respective turnarounds. Which in turn, helped the discounters continue to grow despite economic conditions and customer sentiment increasing post the ‘great recession’.

These Tesco emails are from a time where it’s hard to believe a retailer had got so many things wrong in such a relatively short space of time. The stores and images depicted in the following emails are bad enough – not to mention the plethora of marketing messages, hi/lo pricing and gimmick deals.

What the images in store don’t show are the wider strategical issues that made no real sense at the time, you can say a lot about the handover to Clarke from Sir Terry. Things has been run tighter but as the new CEO, he was in the position to reinvest in the offer and reshape the UK business had he wished to do so.

He did, then didn’t. Then it ran out of steam anyway.

That’s before we consider Blinkbox, Hudl 1,2 and the phone development costs and countless other ridiculous initiatives. Not to mention Harris & Hoole (great Coffee but is too artisan for mass market) and Giraffe (great idea but they bought it then essentially put it on the bench).

A remarkable time in the industry and a reminder of just how good a job Dave Lewis has done in the years since. Whilst the Booker deal wasn’t welcomed by all non executives and analysts. The fact Tesco were in such a position to do the deal was testament to the work that Dave Lewis (and Alan Stewart as CFO) have done……

These newsletter links form part of the Grocery Insight archive and are what subscribers to our service received back in 2014/2015 to the present day. The main difference is the emails are longer now and feature better images via the updated iPhone….

A weekly email covering the latest events in the industry; such as Tesco store operations, store visits or new promotional packages are all covered. Please visit our emailed retail insight page for further information.

Grocery Insight provide market insight on the UK sector with a focus on individual retailers such as Tesco. This insight is useful to various stakeholders and due to my store based focus. Insight can be delivered to suppliers to focus on growth opportunities, analysts and investors to assess the business performance and long term outlook and retailers themselves to assess best practice. 

Newsletter 1 – Fuel Save – March 2014:

Our first retail email newsletter from the archive comes from March 2014, where Tesco have launched Fuel Save after a trial in Wales. Another shining example of them not really understanding where the market had gone with lower prices. Choosing instead of drop some investment in to fuel pricing and reward customers that way. Also features some great clearance examples of Tesco clutching on to products to save on markdowns / clearance, from Halloween. Despite it being March.

There is far worse to come……

We have another look back in time at the Tesco ‘dark days’ tomorrow. The ranging is really quite something(!)