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5 Branding Lessons Courtesy of Tesco’s Tumble

Posted On  September 24, 2014

In the business world there are countless stories that prove even giants can stumble.  This week, we have another case in point:  the world’s second largest retailer, Tesco, has started to show significant cracks in its empire.

Tesco’s quarterly data this week revealed a widening sales decline, making it the worst performing supermarket in the UK.  Moreover, it is mired in scandal via its admission that it had overstated profits by £250M. Consequently, the share price has plummeted, wiping more than half of the company’s market value in the last 12 months.

Why the sales decline?  Tesco took its eyes off the ball of its core business as it focused on international expansion. While trying to grow abroad, it cut jobs and decreased in-store investment in the UK just as its rivals, looming in the wings, were doing just the opposite. Add to that, consistent price pressures from discount retailers such as global-chain Aldi, European-chain Lidl and Walmart’s British chain, Asda, whose profits are all showing incremental gains.

Is there a moral in Tesco’s story? Five cautionary lessons Tesco should consider as we follow the next few chapters of this story:

  1. Stay in touch with marketplace changes, including changes in consumer behaviors and patterns, as well as competitive activity and their influence on the consumer psyche.
  2. Ensure strategic choices are congruent with your company’s core mission. If expanding into new markets requires re-allocating resources from the core business, assess and then monitor against the limits.
  3. Claiming customer-centricity is one thing; running a business for customers is something else. Never take customer loyalty for granted.  We, of course, recommend measuring it.
  4. Seek to re-establish trust with stakeholders. The new UK CEO must seize the opportunity to demonstrate visionary leadership. Comebacks are possible but not without a clear and believable strategy that garners support from customers, employees, vendors and shareholders.
  5. Act in alignment with your core mission and brand promise. Tesco needs to re-purpose itself, arguably redefining its core mission and its promise that “Every Little Helps.” Customer experience and communications  must convey genuine empathy with customers to ensure and assure that it is a brand synonymous with assisting, supporting and serving.

The 21st Century continues to show us that no brand is too big to fail, or at least stumble, however dominant its market position, whatever its sector. It remains to be seen whether “Every Little Helps” can indeed be the saving grace for Tesco.

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