Customer-Centricity – are you listening Tesco?
Time to get back to basics.
Phase 1: Get management off their arses. Welcome to the world of Dangerous Dave Lewis, the new CEO of Tesco. A boss who must put the wind up managers by making them get back to the shop floor on a regular basis. Change Management in the real world is much tougher than in a text-book. When Tesco turns it around, they will write more text books on the subject. In the meantime, this article will suffice to provide some real insights. My thanks to Matthew Todd at PWC for putting me onto it.
Phase 2: Make everybody realise this is a life and death struggle. Next close your gigantic campus-style headquarters in Cheshunt and 43 unprofitable stores as part of a drastic plan to turnaround the business. Then close Tesco’s generous benefit pension scheme. Then sell the analytics business behind Clubcard that helped build the business. Then scrap the dividend payout to shareholders. The slash 30% of the retailer’s central costs. And… sell Blinkbox, your online streaming service. And… sell Tesco Broadband.
Phase 3. Do all this asap. Dangerous Dave has become Drastic Dave in just 5 months. He has improved business performance with quick win ideas, PR and appointments in the short-term and then announced the serious changes that will make the long-term difference. Drastic Dave said his strategy had, “Wide-reaching implications for every stakeholder in our business.” Every stakeholder! Even the shareholders were not spared pain. That is real change management. I can only imagine the conversations that must have taken place to win that aspect of the new deal. It shows how strong he is as a leader and that is exactly what the market, which has been giving Tesco such a hard time, needed to see. It also shows the current workforce that he applies the same principles across the board. Now he’s gone from Dangerous to Drastic to Decisive in my book. On a personal note, I too will feel the impact: I am convinced my newly opened Tesco Express will be for the chop. It is in a converted pub that was never fit for purpose and looks like a FMCG and booze junk yard that apparently profiles my rather upmarket part of an upmarket Berkshire town as a turkey twirler and beer guzzling sump. So that’s me back to Budgens and the co-op then for stress food purchases? When it involves a business that is so important to the UK economy, change management on this scale has implications that impact us all.
Phase 4: hang on tight and pay attention to the customer
Update on Q3 2015: Tesco’s market share has fallen to a 10 year low but you have to keep results in context. All major chains are losing out to the German discounters Lidl and Aldi with Asda losing out the most. According to Kantar the entire British grocery market is continuing to register ‘sluggish growth’ due to falling prices and changing shopping habits, as people dispense with the big weekly shop and buy goods as and when they need them. So learn how to play ball in the foothills or head for higher ground Tesco. Which is it to be? Keeping a foot in both camps is destined for failure.
Tesco: The Darling of Customer Marketing Guru’s Issues Its Fifth Profit Warning
Tesco continues to struggle. According to this piece from the Guardian newspaper, Tesco has issued its fifth profit warning, share price has plunged (down 16%): Tesco is on the floor. Why does this matter? Why is it worth me writing about. Let’s go back a little.
In the early 2000s Tesco was much lauded my many: the customer-centricity gurus, the 1:1 marketing gurus, the data mining and predictive analytics players, and customer loyalty program vendors. Tesco was the exemplar of harnessing customer data through a loyalty programme (Tesco clubcard), using data mining and predictive analytics to generate insights and then doing database driven marketing based on these insights. In the process Tesco went from being just one player amongst the UK grocery retailers to the the dominant retailer. At one point it looked like there would be no…
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