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The not so super market. Why Tesco has lost its way.

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The CEO of Tesco, Philip Clarke, is now the ex-CEO of Tesco. He left the job last week, having failed to turn the retailer's fortunes around. Indeed, some would argue that he was actually the catalyst for the decline in the store's success.  These things are relative, so don't expect to see your local Tesco with its windows boarded up just yet. However, when you're the king of your industry, any sign your strength is waning is seized upon, and Tesco is simply no longer the mighty beast it once was.

Perhaps when you fly that high, there's only one way to go. Or it's possible everyone just tired of seeing store after store open in every town in the land (within ten miles of where I am writing this, there are five Tesco outlets). I'm sure vastly superior minds to mine are pondering the reasons for the supermarket's troubles right now - but I think there's a couple of obvious contenders.

First of all, there's the service. Ask almost anyone whether they feel they have an attentive and caring experience in Tesco, and you're sure to receive a negative response. Clearly there are exceptions, but on the whole, the sensation of being all but invisible to the staff is hard to ignore. In fact, thanks to the self check-out system, it's more than possible to spend a substantial sum without ever interacting with a single employee. Try returning an item, locating a product or raising a query and watch the service breakdown. I have encountered everything from shrugs of indifference to outright hostility, before now. This sort of attitude doesn't happen by chance. It's a cultural problem which, ultimately, begins with the most senior management. On the shop-floor, if the staff don't feel cared about, then they are unlikely to care. And it has never been so easy to take one's custom elsewhere.

Which raises the second potential cause of Tesco's woes: the newcomers. When Aldi and Lidl first started appearing in our neighbourhoods, they were viewed with suspicion, before becoming something of a joke. Then a massive recession hit. When household incomes plummet, pride is a luxury many cannot afford. Suddenly, shaving 25% off the cost of a weekly shop was no longer a frippery, it was essential. What's more, these two bargain grocers were not ashamed to position themselves at the bottom of the market. Dirt cheapness is their USP and it works pretty well.
Aldi, in particular, has a long running TV campaign which wittily but bluntly hammers home the suggestion that their alternative brands are just as good as the famous stuff, only much less expensive. Through necessity, many people gave them a try. A good proportion of those people are now loyal to the shop - even if their incomes have recovered. In just the same way as Primark went from being a 'poor man's clothes shop' to being sneakily fashionable (and remarkably cheap), using some smart PR and determined marketing, so Aldi has become a supermarket of choice. The owners of those 4x4s in the car-park have ceased to be embarrassed at being spotted there. Instead, using Aldi makes them feel shrewd and a little off-piste. It's an impressive brand evolution, and it has left Tesco with an almighty headache.

Of course, the customer base doesn't divide itself in quite the neat way I've suggested. It isn't a case of one or the other. I'd guess that many shoppers actually use Aldi for a range of basic cupboard fillers, then top up with things from Tesco they can't find at the cheaper outlet. Nevertheless, basic cupboard fillers ought to be Tesco's stock-in-trade. Lose that market and you lose an awful lot of margin and additional impulse buys.

Unexpectedly, the market leader has been overtaken, lumbering about in an attempt to maintain its status, while a couple of nimble latecomers have out manoeuvred it. Under a new CEO, Tesco may well reach dizzy heights once more, but it will be more of an uphill struggle than anyone imagined a decade ago.    

Magnus Shaw is a blogger, copywriter and consultant

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