Tesco’s complicated turnaround strategy requires clear communication

It took Tesco almost three hours to explain to investors on Tuesday afternoon how it will win in the “new era of retail”.

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Those that were there for the duration heard CEO Philip Clarke, UK managing director Chris Bush and group multichannel director Robin Terrell list more than 10 ways it would adapt to keep up with changing shopping habits.

They included an increased focus on price, quality, service and range and investment in loyalty, multichannel, convenience and a revamp of its big stores. There was talk of “accelerating” the pace of change, of offering a better environment for colleagues, of the “second curve” of retail, where bricks and clicks have replaced bricks and mortar.

It remains unclear how well that went down with investors. The supermarket’s share price dropped, mainly on the back of an admission by Clarke that Tesco’s market-leading profit margin would now fall.

Yet the grand strategy broadly makes sense. A revamp of its big stores is much needed after years of neglect to ensure Tesco is making use of the space and giving customers a reason to visit.

Likewise investment in convenience, digital and multichannel is correct, that is clearly where the market is headed.

Yet these will all take time. Likely years. In the meantime, Tesco is losing out to Aldi and Lidl at the bottom end and Waitrose and M&S at the top.

So Tesco needs to decide what its priority is now and clearly communicate that message to customers. It cannot possibly bamboozle them with everything it brought up earlier this week. It must take a line and go with it.

Aldi and Lidl have succeeded because they know what they stand for, value, promoting price and quality. For Waitrose it is matching it values, such as its community work, with those of its customers and highlighting the quality and provenance of its produce.

Asda goes for the price message, with plans to throw in a bit of quality. Sainsbury’s values campaign has been rightly lauded.

What then for Tesco? What is its clear point of differentiation and the reason why people shop there?

Perhaps the answer lies in some of Clarke’s words.

As he put it: “Tesco is for everyone and that means delighting customers however, whenever and wherever they are. Meeting every day needs like no one else can.”

So really then, in convenience. Not in the obvious sense of the word in that it has the most stores in the easiest to reach places. But in meeting the needs of its shoppers.

That incorporates the in-store environment and service, the reassurance customers are getting the best prices on a wide range of high quality items, the Clubcard loyalty scheme that will soon be on mobile, its multichannel operation.

If Tesco can align it’s marketing behind that message then it may be able to boost its sluggish sales and really win in the new era of retail.

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