Mark Ritson: Tesco’s budget Jack’s stores will fail, because you can’t beat Aldi at being Aldi

By opening a new chain of budget stores, Tesco is trying to compete in an arena its business model is unsuited to, and which Aldi has taken decades to perfect.

For many years, long before I appeared in these fine digital surrounds, I used to write for a rival publication called Marketing, which is no longer around. I spent about 10 years as its branding columnist before some pushy bloke from Marketing Week rang me up and convinced me to jump ship.

When I called the then-editor of Marketing and told him I was off he was quite sanguine about the whole situation. This was a shame because, if he had acted upset and offered me a five fingered counter-argument, I might have stayed put. But he basically said “OK, best of luck” and then just as he was about to put the phone down he asked: “Any recommendations for someone to replace you?”

READ MORE: Mark Ritson: Don’t just stand for something, stand against your competitors

I thought about suggesting the French marketing expert Hugo Fuckyourself for a moment, but the moment passed and I said Helen Edwards. I’d worked with Helen on a couple of jobs. She’d come in to my brand management class at London Business School and talked to my MBA students several times. She had a good brand consulting business and she knew her onions. “Yeah,” I reiterated down the line, “she’d be good.”

And so I headed off to Marketing Week and Helen took over writing a column about brands for Marketing. And then something very disagreeable happened: she started to do a very good job. At first, I thought it was beginner’s luck but each week her column was really very good. Disturbingly so.

At the end of the year I put on the tux and went to the Grosvenor House hotel for the annual PPA Awards where I’d been shortlisted for Business Columnist of the Year. There were eight finalists so you turn up pretty sure you won’t win but happy to be there. But two hours and six litres of relatively good champagne later you are pretty fucking convinced your name is on the trophy. I’d won the thing before, why not again?

When they got to the big award I was basically 100% certain that I was on the way up. “And the winner is,” started Mariella Frostrup, “Helen Edwards.” I clapped but I was super upset.

And then she started doing it every year. I’d get shortlisted with the Nursing Gazette and Trade Union Periodical and figure it was mine to lose this year. Then Edwards (as she was now known in my household) would waft up onto the stage again giving it the old “what a shock” and “thank you judges” while I jabbed a steak knife through my tuxedo trousers into my upper thigh.

Eventually I stopped going to the PPA Awards because, despite what the cast of TOWIE might tell you, there are only so many nights you can spend pissed, feeling like a loser and getting fucked at Grosvenor House.

It got to the point, I have to admit, where I started to take more than a passing interest in Helen’s approach. First, I started to look at the way she would write. Then the topics she covered. Things got darker and I started to let my hair, which is a very similar dark shade to her own, grow towards my shoulders. Then a little perfume – just a dash of Givenchy. Finally, as the need for a PPA victory really took hold, I am not ashamed to say I turned to women’s underwear. I’d write my column, just like Helen, in bra and panties and a nifty little outfit from Chloe or, occasionally, Yves Saint Laurent.

READ MORE: Helen Edwards: The best marketers know how to link theory with practice

Eventually I got the help I needed. The women’s underwear was dispensed with (well most of it) and I went back to being me. But it got weird for a time back there. Really weird.

Be true to your brand

It’s a story the team at Tesco should take to heart because, as ridiculous as it is, they are about to make exactly the same mistake as me in a bra. Next Wednesday, in the sleepy Cambridgeshire town of Chatteris, Tesco’s CEO Dave Lewis will cut the ribbon on a bold new retail experiment. Named Jack’s – in honour of Tesco’s famously frugal founder Jack Cohen – the Chatteris store is likely to be the first of up to 100 that will open up around the UK.

The clue as to why the sleepy Cambridgeshire town has been selected for the first outlet of this new supermarket chain can be found on Bridge Street, barely a two-minute drive from where the gala opening will take place next week. There, housed in what was once the local Co-op, is the fastest growing supermarket in town: Aldi.

You don’t win by beating your competitor at a game they have been playing for decades. You win by playing the game your way with your unfair advantages.

For a decade now both Aldi and Lidl (which is five miles away up the A141) have been making significant inroads into the UK supermarket business. Their growth has come at the cost of all the big British supermarkets but, because of its former dominance, Tesco has suffered the worst at the hands of the German discount giants.

Jack’s is Tesco’s strident attempt to fight back. The stores will be located in Aldi and Lidl strongholds and will mimic the quasi-brand approach of the German pair, which usually relegates household brands to a very minor role in-store. They will offer lower prices and a more limited selection in much smaller stores. In other words, Tesco is about to attempt to beat Aldi at its own game.

But there are two intractable reasons why Jack’s will fail. I am going to summon all my many years of consulting experience and PhD training to make these titanic, incredibly advanced points. The first reason that Jack’s will fail is because Tesco is not very good at being Aldi. The second equally advanced point is that it would fail even if it was good at it, because guess who is even better at being Aldi.

Aldi.

This is a foolish move by Tesco. It has forgotten one of the core principles of branding – to thine own self be true. Tesco has a certain way of doing things. It’s a rather amazing and successful approach that has served the British company very well for many years. But everything in that approach, that culture and that operating model makes it entirely unsuitable to run an Aldi-style discount supermarket. And the lean, ridiculous operating model that makes Aldi so successful will ensure Tesco will struggle to make any money while it fails.

Aldi’s lean operating model

Aldi is a fucking shark. No brain. No personality. No toilets. It’s just a big, lean shark that is all muscle and instinct and success. It swims around being a big shark all day long, not worried about anyone. It is a brand forged in the disastrous, deserted environment of post-World War 2 Germany and it has evolved a way of doing things that somehow matches great quality with incredibly low prices. It does not have an employer brand or strategic planning sessions. It just glides around being Aldi and not giving a fuck about anyone else.

I remember 20 years ago when Walmart decided to enter Germany. Aldi just swam over to it and ate it up. Walmart – the great Walmart – did not just fail in Germany, it got S-M-A-S-H-E-D. The German team ended up closing everything down, running for the airport and essentially promising on the life of their kids they would never set foot in Germany again. It was a massacre.

READ MORE: How Tesco’s new discount chain can compete with Aldi and Lidl

Tesco cannot possibly match Aldi or Lidl. And while it wastes time and resources and people and money on this futile strategy, the focus on Tesco being Tesco will be lost. At exactly the time when you want all the focus of a branded house and a new approach at Tesco, you have divided and distracted your operations with a foolish attempt to beat the Germans at their own game.

Like me wearing earrings and a bra to try and match Helen Edwards, all Tesco is going to achieve with Jack’s is to lose time, lose money and ultimately fail. That’s a shame because, when you’re faced with a really tough competitor, you know the best way to beat them? Play your own game, even better.

You don’t win by beating your competitor at a game they have been playing for decades. You win by playing the game your way with your unfair advantages. Tesco can beat Aldi by being more Tesco-like. It is certainly not easy but it carries a much greater probability of success than its current strategy of trying to be more Aldi than Aldi.

Let Tesco be Tesco. That’s the only way to win. I can maybe beat Helen Edwards to a PPA award by saying fuck a lot and writing articles about sharks. It may not work but it’s better than wearing women’s clothing and trying to be something I am not.

Strategy is not some puzzle where you work out your competitor’s magic number and then use that number to beat them at their own game; if it was that easy we’d all be doing it. Strategy is working out how your existing assets can be used to flip the board and then crushing your rival as a result.

Marketing Week columnists Mark Ritson and Helen Edwards will both be speaking at the Festival of Marketing, which takes place in London on 10 and 11 October. For more details, go to festivalofmarketing.com.

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Comments
  • Justin Lines 13 Sep 2018 at 5:41 pm

    The real losers will be the suppliers.

    Smaller margins, more pressure.

    Good marketers would make the price go up.

  • Tom Almond 14 Sep 2018 at 9:14 am

    Great read.

  • T Au 14 Sep 2018 at 9:28 am

    Recommended article: “Helen Edwards joins Marketing Week”

    Does that mean the women’s underwear will be making a comeback to Mark’s wardrobe?

    • T Au 14 Sep 2018 at 9:31 am

      On a separate note, is Yves Saint Laurent missing out on their crucial target segment – depressed and desperate columnists?

  • malcolm wicks 14 Sep 2018 at 10:10 am

    I am a bit more optimistic about Tesco. Their success with Tesco Express and One Stop demonstrates that they can do things differently.

  • Pete Austin from Fresh Relevance 14 Sep 2018 at 10:20 am

    Tesco used to be like Lidl and Aldi, 50 years ago, in the days of “pile it high and sell it cheap”. That’s probably why they think they can do it again. But literally nobody working there remembers those days, except a few pensioners on the tills, so I’m with Mark. Tesco has no chance.

  • Jaskaran Sahota 14 Sep 2018 at 11:53 am

    Great article – very entertaining. However, I would add that Tesco has recently purchased Booker (the UK’s largest wholesaler), effectively cutting out the middle-person in their supply chain, and I imagine the associated costs, saving they can pass down to Jacks buyers. So they could very well mimic the Aldi / Lidl supply chain model of cheap, own brand stuff.

  • JENNY KIERAS 14 Sep 2018 at 12:36 pm

    Loved this. Very much a topic of debate in our office as we have seen Tesco fall significantly in popularity with parents. I can see the reasoning in referring to their history of ‘stack it high, sell it cheap’ but that isn’t the main USP of Aldi and Lidl. They DON’T open giant, wholesale size stores like Tesco and Booker and equally they are very, very good at offering great quality. They offer a full range of own-brand organic baby food where Tesco only offers a bag of rice cakes

    • Simon Hernaus 8 Oct 2018 at 3:03 pm

      Very important twist you added. I agree with Mark’s overall take, but seeing Aldi (ok, Hofer in our latitude) as “No brain. No personality …” chain is an underestimate every competitor would / will dearly pay. In fact, it happened already in our local market. As you said – they are cleverly pushing organic products, opening new categories (sheep, goat organic yoghurt etc.) So, it’s not only a price game at all!

      And Heather expands. “Boring”, exactly (I mean as a nonislander, I don’t have a firsthand experience, but the traditionals giants are “boring” on the continent as well). While the Aldi “machine” always brings interesting proposals – be it craft beer, flavoured snacks, local products, jogging equipment, etc.

  • Tadas R. 14 Sep 2018 at 2:12 pm

    This article was merely entertaining, but what does it mean for Tesco to be more like Tesco? Isn’t that what they have been doing and losing market share? Doing the same and expecting a different result is rather pointless.

  • Heather Johnston 16 Sep 2018 at 12:31 pm

    If my recent comparison shopping is anything to go by, the problem with Tesco being more Tesco is that there isn’t a there, there. At least with Aldi and Lidl you can drop in on a main street and get round in an efficient ten minutes – about the same time as it takes to walk from the door at Tesco Extra to the yoghurts. Convenience store Tesco’s are in the right places but more expensive than Waitrose. And the product selection is infinitely boring.

    We’re talking existential crisis here, peeps, and looking at the way demogs are going – small households, older households, and a transient population of younger renters, many of whom are doing the urban living thing – big old Tesco is not answering those challenges. Luckily for Aldi and Lidl, they are (and there is an element of luck here – they’ve been in the UK for decades and only now is the market coming round to them. Too late for Netto, though). I can actually remember the first generation of Tesco’s and they were bright, brash, lively and exciting – loads of promo, loads of coupons, typical challenger. But whether a store with a 31% share of supermarket sales can ever go back to that is questionable.

  • tom wright 20 Sep 2018 at 8:52 am

    I briefly worked for Tesco as part of a graduate management intake in the late 80s. In my indoctrination/induction, you got the Tesco origin story – how Jack Cohen made it big following his mantra ‘pile it high, sell it cheap’. It was in fact a British Aldi, and post war Britain, with its ration stamps, was as hungry as Germany. The first store was named after his wife – by a shortening of ‘Tess and Co’ to Tesco. Potentially Jack’s is more true to the original brand and DNA of the firm than the bloated monster that it became after overtaking Sainsbury’s – prior to which, it had always, always, always led on price, not variety.

  • Marcelo Ferrarini 21 Sep 2018 at 1:12 pm

    But is the best strategy to always double down on your strengths in face of a competitive threat, even if massive market/consumer trends are in favour of your competitor’s strategy? Great article!

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