Tesco brings value focus ‘to life’ as it takes on Aldi and Lidl
Tesco CEO Dave Lewis says it has taken the retailer three years to get its corporate brand, supplier relationships and own-label to a place where it can be competitive at the value end of the market again and now is the time to start communicating that.
Tesco is shifting marketing focus to put the emphasis on value as it looks to take on Aldi and Lidl and their price and quality messaging with a communications push of its own.
That focus will see in-store communications start to promote its ‘Exclusively at Tesco’ range. This used to be known as Tesco Value but has been overhauled under CEO Dave Lewis and chief customer officer Alessandra Bellini, starting with the launch of the controversial Farm Brands but now including 16 brands across almost 400 products.
The communications will highlight the cost of a basket of Exclusively at Tesco products, as well as the price of individual products. And Bellini tells Marketing Week that this message will appear across its advertising in the coming months, alongside more seasonal messaging.
“We will do more than one thing obviously, there are a lot of seasonal events coming up, Halloween, Christmas, a number of important customer moments. But [value] will be a focus for the foreseeable future,” she says, speaking at a Tesco event this morning (3 October) after the retailer’s first-half results.
Aldi and Lidl have been on the rise in the UK for a number of years but Lewis says it has taken Tesco three years to get the business to a place where it can talk about value in a competitive way.
Rebuilding the Tesco brand
That mirrors the journey the wider Tesco business has been on to rebuild the brand following the accounting scandal in late 2014. Lewis says the brand hit a “real low point” in October that year, with its Index score (a measure of a range of metrics including value, quality and reputation) on YouGov BrandIndex falling to almost zero.
However, even before the scandal, there was a big gap between Tesco and the rest of the ‘big four’ supermarkets. But the data shows Tesco’s score has now risen above where it was before the scandal and is closing the gap on its main competitors.
Its Index score now sits at 23.2, a statistically significant increase. However, it is still behind Aldi on 31.4, Sainsbury’s on 30.5, Lidl on 25.4 and Morrisons on 24.7. Just Asda comes behind Tesco on 17.8.
“That improvement is driven by all our activity. Brand appreciation comes from the store experience and shopping. That progress has been quite important to the turnaround of the business because a real appreciation and trust in a brand gives other opportunities for innovation that you don’t have when [trust is low],” he explains.
It’s taken us three years to get our corporate brand, our supplier relationships and own-label to be able to execute the strategy in the way we are now doing it. And you’ll see it come to life in the next couple of weeks.
Dave Lewis, Tesco
One of the key indicators of the store experience comes in its work on value. Lewis points to the price of a basket of 30 key items, which now costs less in Tesco than two unnamed competitors that Lewis refers to as ‘competitor A’ and ‘competitor L’. At Tesco the basket costs £30.58, compared to £32.41 and £32.68 at its competitors respectively.
“We have got ourselves to a place where we have the most competitive basket offer that we’ve had in the UK market for many years,” he explains. “It’s taken us three years to get our corporate brand, our supplier relationships and own-label to be able to execute the strategy in the way we are now doing it. And you’ll see it come to life in the next couple of weeks.
“The idea of getting a level of offer inside Tesco that is competitive to the value end of the market is something we committed to doing. We’re 80% of the way there and now is our time to start communicating it.”
Positioning Tesco at Jack’s on value
This communications push is not the only way Tesco is taking on Aldi and Lidl; just a couple of weeks ago it launched its own discount chain, Jack’s, with two stores already open and more planned. While the work on Exclusively at Tesco is aimed at making its core business more competitive at the value end, Jack’s goes head-to-head with the discounters, emulating their business model and store set-up.
Bellini says Jack’s will be “more affordable” than Tesco, but that Exclusively at Tesco will offer that affordability across 400 key products.
READ MORE: Tesco’s simple positioning for Jack’s aims to attract price conscious consumers but it must be backed by quality
“They are completely different shopping experiences and business models. When you look at the price you offer to customers, it’s on one hand the cost of the individual products but it’s also the business model. Jack’s is a much smaller assortment – 2,500 lines against 35,000 in Tesco. The way the layout is configured, the merchandise is put on shelf, the packaging, the number of people helping; all of that contributes to making Jack’s affordable across the lines.
“Exclusively at Tesco is 400 lines. We look at a total shopping experience, then Jack’s will be more affordable than at Tesco but what we are really keen to do is offer really essential brands and lines at Tesco as well, for the moment, the mindset, the needs of customers.”
Tesco’s Alessandra Bellini will be speaking at the Festival of Marketing, which takes place at Tobacco Dock next week on 10 and 11 October. There is still time to buy tickets, visit www.festivalofmarketing.com for more information.
What Ritson said.