Blog: How do you solve a problem like Tesco?

07 June, 2013

The Sound of Music may have tabled the question: “How do you solve a problem like Maria?”

But this week in the City there was the plea: “How do you solve a problem like Tesco.”

Shares in Tesco fell by around 5% after the supermarket giant reported a drop in UK sales over the past three months. Earlier this week it said that like-for-like UK sales, excluding petrol and VAT, dropped by 1% during the 13 weeks ending 25 May 2013.

In April, Tesco reported its first fall in annual profits for 20 years, and also said it was exiting its US chain Fresh & Easy at a cost of £1.2bn. The retailer is also planning a programme of store refurbishments and wants to refit almost 70 of its larger outlets.

This week it blamed TVs, saying that it has given too much space away to these large electronic goods that actually don’t generate enough profit. Along with the small matter of the horsemeat scandal, being intrinsically linked to it in the eyes’ of the consumer, no matter the reality.

Ah… wouldn’t we all like to blame our woes on rows and rows of big screen TVs?

Philip Clarke, chief executive, said: “In April, we set out our approach for growth and returns for the group, including a number of appropriate and realistic objectives for the years ahead, and we have started the year on track, despite a continued difficult economic environment for consumers. 

“This is notwithstanding our planned work on general merchandise, which has held back sales in the UK, and a small but discernible impact on frozen and chilled convenience food sales due to the customer response to equine DNA being detected in four products.”

He added that Tesco had set out its plan to “put customers back at the heart of the way we do business”. This has taken the form of initiatives on price and ‘food trust’.

The problem with Tesco (if indeed there is one) stems from this later statement. In a post No Logo, Naomi Klein world, the one size fits all, cookie cutter superstore is well… just not cutting it. Every talk on retail I attend has an expert outlining how fickle the consumer is, how short on time they are and how they are looking for an experience. My local Tesco does not provide this, swamped as it is by its popularity and stifling entrance layout. However, I have been to the ones that have, albeit in affluent or edgier areas than the God’s waiting room of Eastbourne (apologies to my adopted home, but it is hardly cutting edge).

And in those stores Tesco is doing a great job. Its link up with Euphorium Bakery is a stroke of genius, delivering what the consumer wants and the way the want it. Harris + Hoole and Giraffe only add to this mix.

If only we all had problems like Tesco, eh?





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