The supermarket has, for now, reversed the slide in sales. The ‘success’, however, has come largely from an increase in use of coupons and other promotional activity, which boosts volume sales but hits profit margins.
The upcoming marketing campaign from recently appointed Wieden + Kennedy http://www.marketingweek.co.uk/news/tesco-names-wk-as-creative-agency/4002849.article and its Christmas activity will need to be more about brand building as much it is about offers.
Retail analyst Neil Saunders from Conlumino puts it well when he says Tesco has lost its mojo. The planned activity from the agency, which took over the creative account in July, is going to be critical to whether Tesco can regain that mojo.
In the results presentation, CEO Philip Clarke stated that the campaign, expected in the coming weeks, will “describe Tesco for our customers and our other stakeholders in the years to come”.
So, there’s a lot resting on W+K getting it right. The agency has a strong creative heritage of telling great brand stories that connect with consumers. The work with Nike and Honda’s ‘hate something change something make something better’ campaign as well as some more irreverent approaches such as the Cravendale cats and Old Spice man are examples of its creative ingenuity.
Tesco will be hoping to benefit from some of this creativity.
In switching from The Red Brick Road, Tesco got a new creative team in the UK for the first time in 15 years. Things have changed significantly in that time, both at Tesco, the economy and consumer mindset. It’s communications and brand positioning just weren’t hitting the right note with customers.
Sainsbury’s meanwhile, has hit on a brand positioning that customers appear to have accepted and its performance has remained consistently strong while Tesco’s has faltered.
While recent rulings by the advertising watchdog have meant some its ads were deemed to make misleading claims, its Live Well for Less positioning and the ethical business approach of its CEO Justin King chime well with consumers who are facing squeezed budgets, but don’t want to shelve their values and opt for just plain cheap.
Sainsbury’s marketing and promotions are about offering customers a solution to a problem, such as ‘Feed your Family for £5’ and the brand exudes a warmth and credibility that has lacked in Tesco’s messaging.
When W + K was appointed, Graham Douglas, head of interaction and innovation at W+K, told Marketing Week that it wanted to make the Tesco brand loved again. All eyes will be on the first major work they launched to see whether it has managed it.