Tesco’s Tumble
Thursday, 19th January 2012
On Sunday a few of us, over Sunday lunch, thrashed out the reasons for supermarket chain Tesco’s descent from supreme leader of the food chains. A few billion off the value of the company will hardly dent its huge success, but what turned the customers off?
I speak only for myself when I say – unsurprisingly for those that know me – that I have never been a fan. It is not easy, however, to pinpoint what is going wrong. But here are some thoughts:
When the chain announced a major price cutting scheme, pre-Christmas, it was dressed, as always, as a move to benefit consumers. Yet somehow they did not bite as eagerly as they might. Is it possible that a more cynical shopper realises that the chains live in greater fear of their profile and reputation as successful business, than they worry about household spending troubles? Dropping prices simply to help shoppers is one thing, doing it for the corporation and its shareholders is another. Consumers are wiser to this, and they are not impressed.
Next, look at what is happening to shopping trends: the more shoppers realise the value of their pound, the more they expect from it. Waitrose and M&S, supremely middle class, upmarket shops are doing better in the recession. I can’t judge every thing that Tesco sells, but I did a few comparisons before Christmas and the market leaders foods, when matched against their peers – and without me being prejudiced – always fell very short. In short, when we spend we want the best value for money and that can stretch to spending 50p more.
Tesco did great when no one was giving a thought to borrowing, and threw away anything that was surplus, thinking, “what the h*** – there’s always more.” Now that more is not an option – we look for a guarantee of satisfaction, and who has it? Not Tesco, it appears.
I would go further and suggest that if you really want more for your money, shop much further around; combine street markets with independent butchers, farm shops with online. Tesco are the architects of their own fall from popularity. We are so used to their boasting of quarterly success, when an exec wonders about the latest, less optimistic figures, the market gets an acute attack of colic and values tumble. Well, working within the law of what goes up, may come down by fractions (worth billions, as it happens) they cannot say they were not warned. Recipe for success in recession: quality no longer seems expensive.
You will, I am sure, have figured it out without me.
Author: Rose Prince
