“All business successes are marketing successes and all business failures are marketing failures” is an adage beloved of Marketing Society president Martin Glenn when talking up the influence of his profession. It is one he used to introduce Tesco CEO Dave Lewis, who delivered the Society’s annual lecture last week.
Although Glenn’s analysis is fundamentally true, it must have seemed otherwise when Lewis was parachuted in to the business 18 months ago, a month ahead of schedule amid the biggest crisis in its near 100-year history. Its share price was in free-fall and its corporate and brand reputation had taken a huge hit following the mis-stating of its profit by £250m. These are not problems that a marketer can be held responsible for. In reality, the accounting irregularity was just one of many challenges Tesco had failed to meet. The market leader’s market share was being eroded by the German discounters and although it still had the reach and operating model any other retailer would dream of, the public had begun to fall out of love with the retailer. An accounting failure, yes, but Lewis joined a business suffering from a lack of purpose.
It must have been tempting for Lewis to batten down the hatches and to focus on cutting costs. Stores were shut, headcount at head office – including in the marketing department – was slashed but as much effort was placed on rebuilding the brand as making up the financial black hole.
“Brand cardiology”, Lewis told attendees at the Marketing Society lecture, was what was what required. A process aimed at “getting to the heart of the brand – What made it successful and what ailed it”.
Lewis said the operating model – the logistical “science of retailing” – that had helped deliver the monumental success that saw the retailer double its market share in the 20 years to 2005- was no longer able to sustain momentum in face of fragmentation and the upstarts from Germany. “We were big but unloved”.
“The long term erosion of brand power from 2007 and then the cataclysmic events of 2014 [when news of the accounting scandal broke] a few weeks after I arrived meant the trust in the brand hit a very, very low point. The accounting scandal was a catalytic change. There is a point at which you force yourself to re evaluate to a point where you perhaps wouldn’t if you just lose a little [trust] over time. “
This is where the process of “brand cardiology” began. It was also the point where Tesco began to look back to signal its future in the quest to match its functional capability with the emotional draw necessary to make people want to choose Tesco.
“I had been responsible for a lot of turnarounds of businesses in many parts of the world and became an advocate of brand archaeology. What made the brand famous in the first place and how you make that relevant to today rather than want to change it.
“There was a time when Tesco was really on its game when we put the customer at the heart of everything we did and asked ourselves what we could do to help……All the functionality was there but there was an emotional appeal.”
Lewis pointed to innovations, initiatives and firsts that had increased its emotional appeal. From being the first brand to launch home shopping via Teletext in 1984 to ‘Computers for Schools’ and the more enduring and pioneering ClubCard, Tesco had at its peak been a champion of helping customers, he claimed. It also, he added, had allied its core “every little helps” proposition with a “sense of humour”, pointing to the series of 90s ads starring Prunella Scales that highlighted its unique service offers with comedic exchanges between “Dotty” and long-suffering family members.
Lewis, with brand director Michelle McEtterick and chief customer officer Robin Terrell worked with agencies including BBH and Blue Rubicon to “rearticulate it purpose”, extending its “every little helps” proposition to “Serving Britain’s shoppers a little better everyday” – an attempt to draw on the best of its past.
“It is important to show a little more humility as a brand. ‘Serving Britain’s shoppers a little better’ is not overstating what we can do. It is about putting every little helps into context in the way they experience.“
This has manifested itself in ads explaining how to tackle age-old culinary problems such as how much spinach to include in dishes as well as answering cooking temperature conundrums in its Christmas ads, which starred Ruth Jones and Ben Miller and are an attempt to recreate the humour / service balance of the “Dotty” ads.
Marketing communications is just one element and far from the most important, Lewis stressed. “This is about being an experience brand. This is not about being an advertising brand.”
To this end, Lewis canvassed its 325,000 staff for suggestions of service improvements and reinvested in shop floor staff numbers. It has also indulged in a process of soul searching to determine not only how to improve customer service in store but “the concept of what it is to serve”. Early outcomes of this include reformulation of thousands of own-label products that has seen 4.5bn calories taken out of products, a community outreach programme that has seen it walk 1.2m children through its store to explain the food chain and increase awareness of the causes of obesity and a commitment not to put food to waste that is fit for human consumption. “Small changes, massive differences”, Lewis added.
It is too early for Tesco and Lewis to claim success but green shoots are evident. Same store sales rose by 1.3% over Christmas, a modest but solid improvement after a run of declining returns. Perception of the brand is also recovering after a bruising 2014 that saw its valuation slashed by 32%, according to Millward Brown. Its Index score – a measure of how consumers rank it in terms of quality, value, general impression and reputation – rose by 6.6 points over the last year on YouGov’s BrandIndex, an increased classed as “significant” by the researcher and the steepest improvement by any of the major supermarkets by some margin.
Tesco will never be as big as it was, consumption habits and the sheer volume of choice on offer have seen to that. It is also unlikely to sink to the same depths it did two years ago again. Marketing failings might not have been the sole cause of those problems but under Lewis it will certainly be a big reason behind any success it has.