Tesco’s loyalty focus is just one part of fixing bad brand perceptions

Tesco’s loyalty director says the supermarket is shifting its rewards strategy to be more emotionally and less functionally driven. It’s one small step on the long road towards recovering its business growth, which is being hampered by negative brand sentiment, according to YouGov data.

Michael

At Marketing Week Live last week (27 June), Katie Wadey said Tesco recognises that “you have to treat those people who have shown you loyalty to a better service or a better experience than you do those shoppers who are promiscuous”. For example, the supermarket is planning to introduce local rewards, letting customers redeem Tesco Clubcard points at independent as well as chain restaurants.

Loyalty is just one of many areas in which Tesco has fallen behind its rival Sainsbury’s in the past year or two. The latter’s partnership with Nectar opens up a level of flexibility that Tesco Clubcard can’t match, given the range of brands that offer and redeem Nectar points.

The reasons behind Tesco’s business problems become starker still when you consider the brand alongside not just the other ‘big four’ supermarkets – Asda, Sainsbury’s and Morrisons – but also next to the smaller, traditionally more premium grocery offerings of Waitrose and Marks & Spencer. Both have extended their price ladders downwards since the UK’s economic downturn began, so they are stealing a greater share of the mass market.

According to consumer survey data from YouGov’s BrandIndex tool, Tesco has the lowest overall index score of all six brands – something it seriously needs to address.

On YouGov’s measures of quality and reputation, Sainsbury’s is the only ‘big four’ supermarket able to compete with Waitrose and M&S. For Asda and Morrisons, the upside of this is that they rank above the rest of the market on perceptions of value, but disturbingly for Tesco it can’t find any solace here.

Tesco ranks fifth out of the six brands on value, according to YouGov, having plummeted from second place in summer 2011. Only upmarket Waitrose now scores lower. Compared with its competition, Tesco is now experiencing the worst of all worlds where brand perceptions are concerned.

It’s hard to see how Tesco could recapture its value positioning without further hurting its profit margins, so engendering customer loyalty is probably a good plan. The brand needs to show it stands for far more than price.

Making a Clubcard membership feel like a rewarding experiencing – and then evaluating the loyalty scheme data to see whether it’s working – will just be a part of bringing the business back to life.

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