Tesco hasn't had an easy time of it lately. First the horse meat scandal, then the bad news that last quarter saw a 3% drop in sales.
Since then, Tesco’s been doing some serious soul searching, questioning everything from its ethics and health choices to who it competes with.
Tesco’s major strategic changes have been making headlines, but will they make a difference? More importantly, what do Tesco’s new strategies mean for its brand?
Making Waves
65% of shoppers say that removing confectionery from checkouts would help them make healthier choices. Tesco have responded by announcing that they’re removing sweets and chocolate from checkouts in over 3000 UK stores.
Cannily, they’re planning to replace the sugary snacks with healthier choices to maintain as much profit as possible from impulse buyers. The announcement also sparked a serious conversation about accountability and definitely gained Tesco kudos from health-conscious consumers.
Shelves of sugary treats are soon to be a thing of the past at Tesco pay points.
Getting rid of ‘guilt lanes’ is just one of the ways Tesco is making its image more human and honest. It's also planning a £200 million investment in order to get their prices down permanently to bring some stability to food prices and leave gimmicky BOGOFs behind them.
Running With A New Crowd
The move to permanently lower prices represents Tesco’s decision to abandon premium aspirations and focus on being a provider of high quality on a budget. Rather than being in the ring with Sainsbury’s, Tesco is going down a weight-class and competing with low-cost havens like Aldi and Lidl. But the supermarket has also chosen another new sparring partner: Poundland.
The introduction of ‘Pound Zones’ in Tesco stores has raised quite a few questions. Is this a conscious decision to make Tesco the biggest fish in the already crowded pond of budget supermarkets? Will Tesco really be able to beat Poundland at its own game? But surely if consumers want Poundland, they go to Poundland, not Tesco?
Tesco’s lightning reactions to poor sales and a changing market are commendable. Lower prices and socially conscious initiatives could well make it a real category contender with a genuine USP over other budget supermarkets. The problem is the Pound Zones.
Even if Tesco isn’t trying to be premium anymore, it still has a legacy of providing quality. Abandoning this in the name of change is like throwing the baby out with the bathwater.
Using the same tactic as a pound store puts Tesco in danger of bypassing status as a ‘proper’ supermarket where you do your weekly shop and becoming somewhere you only go to bag gimmicky deals of the day. However, if Tesco can only maintain the quality associations of its brand alongside its lower prices, consumers will flock to the aisles.
Tread lightly Tesco, beware of the bargain hunters.
Sources: http://bit.ly/1iiorCQ , http://bit.ly/RcsgPd , http://bit.ly/1qGJzYg
