Dave Lewis’ marketing plan to revive the Tesco brand
Tesco’s new boss Dave Lewis has not been afraid to talk about the damage to the Tesco brand caused by a recent slump in performance and the admission of its accounting black hole. The former Unilever marketer has been employing a range of marketing tactics, including looking at brand archaeology and scale versus empathy, to plot the brand’s revival.
1. Improving message clarity
One of the criticisms levelled as Tesco is its confusing marketing message. Neil Saunders, analyst at Conlumino, believes the retailer uses far too many slogans, straplines and promotional tools, most of which customers find “meaningless” and need to be streamlined. Lewis agrees.
Speaking to Marketing Week at an event in London this morning (23 October), Lewis said there is an opportunity for the brand to engage in a much more “engaging and effective way”. At the moment, he admitted, people walk around the store and see a lot of different signage but not a clear, consistent proposition.
“Historically at Tesco, if something is attached to the building, it’s part of property, if it’s attached to the shelf, it’s part of the commercial organisation, if it’s on the floor or in the front of store, it’s part of the marketing plan. All very sensible if you are optimising individual elements of the business but we need to think about how we can make one consistent proposition,” he said.
Work is already underway, which Lewis is involved in, to sort through the options to “better realise the potential of the Tesco brand”.
2. Boosting empathy
Tesco’s brand perceptions have taken a battering as its performance has slumped. YouGov’s BrandIndex shows that in the four weeks since Tesco announced its profit overstatement, metrics including Impression, Value and Buzz (a measure of the positive and negative things said about a brand) have all fallen by statistically significant amounts. Its overall Index score fell to 6.7, again statistically significant and putting it behind all its main rivals.
Lewis said that while Tesco is a big brand, it has lost some of the “lustre” and that it needs to reengage with customers to increase empathy. It does that, he said, by improving the brand experience.
“Taking a lot of marketing thinking, I have looked at scale and then a measure of empathy, or engagement. By any measure Tesco is a big brand but some of the lustre on the brand and engagement around the brand is not what it has been.
“The opportunity, easy to say – not easy or quick to do – is to nudge that brand into a place where it has a greater level of engagement or empathy. The critical thing is that is something that is only done by deed, not by word. Actions speak louder than words in terms of brand experience so we have to change what we do in order for people to reappraise the relationship they have with us,” he said.
3. A focus on service and availability, not price
The percentage of Tesco’s turnover that requires a store to realise it is more than 90 per cent, making stores “very important”, according to Lewis. However, he admits that service has slipped, in part because staff are asked to do too much. Over the past 18 months Tesco’s range has increased by 31 per cent and stock levels are up by an average of 7.5 per cent over the past three years, while sales grew just 2.5 per cent. The problem, said Lewis, is Tesco is asking store staff to do too much, leaving them with less time to spend with the customer.
He promises to “simplify” ranges to free up staff to spend 2 million more hours on the shop floor before the end of the year. Head office staff will spend 10 per cent of their time helping in stores as part of the “Feet on the floor” initiative. He says the impact in terms of energy has been “phenomenal” in helping to reconnect with the customer.
In availability, Tesco is switching from a model where is measures stock levels at the beginning of the day to one where it measures throughout the day to ensure it is meeting customer needs. This means the 1,000 most popular lines will always be available.
That just leaves price. Analysts are clamouring for Tesco to “go nuclear” on price to take on the discounters, which Lewis admits are taking customers from Tesco. However, he said Tesco already invests “an awful lot” in price through promotions and ClubCard. He will consider whether the investments are being made in the right place, but until the service and availability are right any changes to price wouldn’t have the desired impact.
4. Using Tesco’s brand archaeology
The history of the Tesco brand is in being a “champion for the customer”, Lewis told Marketing Week, whether through Sir Jack Cohen challenging the idea that manufacturer set prices or Sir Terry Leahy introducing Clubcard. That is what Lewis believes Tesco needs to go back to to make it “great again”.
“If we can go back to what made us great and walk the talk customers will remember why they love Tesco”
Tesco CEO Dave Lewis
Lewis only wants Tesco spending money on things that its shoppers can “feel”, not on private jets and ferrying execs around in limos. It costs Tesco £10 for every hour of colleague time in store and so the company needs to balance every cost with whether it could be better spent in-store.
“Brands start to weaken and lose trust when two things happen. One is when they are inconsistent and the second is when the competition repositions. Tesco has suffered from both but this is a good thing because if we can go back to what made us great and walk the talk customers will remember why they love Tesco,” he said.
5. Incremental improvements rather than a big strategy announcement
While Lewis cited previous revolutionary ideas like Clubcard, he was light on detail on what he might be planning for Tesco. When asked by Marketing Week what we can expect from its communication strategy going forward he said “as we share that with customers, you will get to see that”.
There will be no big reveal, no strategy announcement day. Instead, Lewis will test new ideas and stick with what works. It’ll be up to us to spot what he is up to and the financial results and changing customer perceptions to prove if he has been successful.
Really good article. I hope this is more like the sort of articles to come.