• Transform magazine
  • April 16, 2024


Opinion: Paul Twivy asks “What is the purpose of Tesco?”


Paul Twivy, senior strategic consultant, The Partners

Overstating your half-year profit guidance by £250m is a fairly substantial fault in anyone’s books or on anyone’s books, even if the books are as big as Tesco’s. Despite the suspension of four executives including the UK Managing Director as a form of swift, remedial action, it threatens to turn Dave Lewis’s headache into a migraine.

The misinformation smacks of either massive incompetence or, worse, an attempt to massage the figures to make Tesco seem like a brand that’s just in A&E rather than intensive care. A Victorian grocer was trusted for measuring and pricing accurately and fairly. Indeed, Arthur Brooke of Brooke Bond grew his business by being the first grocer to sell properly measured rather than loose tea. In the 21st century this basic equity still counts for a lot.

Dave Lewis is of course completely innocent in all this, having just arrived from Unilever and he is a fascinating choice. He is not a traditional retailer but he is an excellent custodian of brands as his role in the Dove ‘Self Esteem’ campaign proves. It is interesting that in recent trust surveys Dove comes out even higher than Unilever itself.

Put bluntly, the current identity is old-fashioned and cheap. Putting a brand-expert marketer in charge right now might be the smartest move Tesco ever made.

When I was CEO of Bates Dorland, we had the advertising accounts for some of Britain’s biggest retailers including Woolworths, B&Q and Superdrug. They all came under the watchful Kingfisher eyes of Geoff Mulcahy. Aside from his disconcerting habit of chewing paper-clips in meetings, Geoff would often interrupt an attempt to discuss the positioning of Woolworths by delivering an anecdote about how Wal-Mart dealt with screwdrivers. He was the epitome of the notion that “retail is detail” and that the duty of all retail directors is to be out in the stores. There is no doubting his genius for detail but perhaps Woolworths would still be with us if we had been able to focus on the fundamental reason for it to exist on the modern high street.

I always think it’s a lovely touch that Sainsbury’s describes its headquarters building as the ‘Store Support Centre.’ Yet Tesco now needs its headquarters to be the ‘Brand Strategy Centre’ and Mr. Lewis looks like an excellent candidate to deliver just that.

It’s easy to forget how dazzling Tesco used to be as an innovator. Clubcard led the way in customer loyalty and database marketing. ‘Computers for Schools’ was a good, tangible CSR idea. Tesco’s pricing and range selection was always highly competitive, leveraging its scale. Yet there was always a sense that a lot of its energy was a banker-style, workaholic culture, in love with its own logistical brilliance, aiming for the number one slot, and determined to do anything to get there.

The trouble with the number one slot is that it is often a curse when you get there. Nokia, IBM, Kodak and Toyota have all discovered this to their cost. You can easily become too ubiquitous and too dominating and sacrifice true distinctiveness in pursuit of scale. It is salutary to remember that every year an average of 50 companies fall out of the Fortune Top 500 to be replaced by 50 others.

Tesco launched ‘Building a better Tesco’ two years ago and has invested £1bn in trying to turn it into a reality. It has retrained 250,000 colleagues, improved 8,000 core products and refurbished over a third of its UK stores. So why the decline rather than a turn-around?

Part of the answer lies with sharper competitors. Lidl and Aldi are attacking from underneath, Waitrose from above and Sainsbury’s post-Justin King will be looking to re-present their credentials. ASDA meanwhile is already underway with a five-year transformation programme, with a clear focus on the brand.

Tesco needs to redefine its core purpose. It is currently stated as, “We make what matters better, together.” Aside from the bad grammar, it is generic and woolly. One of the keys to getting their purpose right is a value they have recently added, “We use our scale for good.” This is interesting because it goes to the heart of Tesco’s issues. Often accused of using to scale to bully suppliers and put independent shops out of business, it is interesting to start asking how it could use scale to lead on important issues.

Could Tesco use its scale to support British farmers? Or to encourage shoppers to eat only local, seasonal produce? Or to support the regeneration of local communities in tough, urban areas? Or to provide hubs for entrepreneurs? Or to sponsor a record number of apprentices?

Tesco also needs to reprove its food credentials as well as its ethical credentials. Diversifying can be good but being a grocer is at the heart of what it does. Lidl’s recent emphasis on food quality has been innovative including Dill, the pop-up restaurant in Sweden, that employed a two Michelin-starred chef to prove how good its food really is. Tesco step up to the plate!

It might be useful for Tesco to think carefully about how Tesco Express, Tesco Metro, Tesco Superstores and Tesco Extra could embody different shopping experiences based on need rather than being the same T-shirt in different sizes. To put it bluntly, Tesco Metro could be their mini-Waitrose and Tesco Express their mini-Lidl.

Once the core purpose has been redefined and the architecture and the offer of the stores has changed to reflect that purpose, Tesco also needs to give people visible permission to reevaluate them. They need new branding and a new visual identity. Put bluntly, the current identity is old-fashioned and cheap.

Putting a brand-expert marketer in charge right now might be the smartest move Tesco ever made.