Wednesday, 16 April 2014

Tesco Bottle It and Pay The Price

About 18 months ago, it felt that they were starting to get back at their best, with new store concepts such as Watford, Chelmsford and Tooley Street once again proving that their detractors in retail do so out of fear and envy rather than the pseudo-local/ anti-big rhetoric they spout.

A Tesco who hadn't seen their leader lose some of the best brains in retail under his tenure wouldn't have bottled it, but here we are in a new and scary retail environment seeing Phil Clarke looking like a late era Roman emperor ignoring his empire's problems and blaming everyone but himself. I'm amazed there hasn't been a Downfall video appear on YouTube featuring Phil Clarke's words dubbed over Hitler's last rant. Actually, Clarke's infamous motivationals on YouTube are getting closer to Downfall - where once he would be filmed in a store, nonchantly chatting in front of a fixture, now he's filmed in his bunker on the first floor of the grey Lubyanka in Cheshunt.

Clarke's allies suggest there were critical flaws in the organistation he inherited from Terry Leahy, conveniently forgetting that he would have had a lot of input into those from his previous roles. The reality is very few big businesses are perfect organisations, with processes tending to evolve or adjusted to meet changing demands caused by expansion or the market changing. What makes a great leader of a big business is the ability to keep all the plates spinning - through trusting his senior team and inspiring the business. People at Tesco would do anything for Terry, they'd do anything for MacLaurin. But for Phil? Well, I can't say for certain as I'm not working for them, nor particularly closely with them, at the moment. But the slipping standards in stores suggest he has "lost" the workers in the same way a football manager is said to "lose" the dressing room.

There is still some pride out there as the picture of a produce fixture tweeted recently shows (see below), but there's also countless examples of pure shoddiness (two examples below!)

You have to question priorities in a retailer that seems to accept these two extremes. I've been saying a while that grocers ignore ambient departments at their peril, but Tesco are continuing to put all their eggs into a fresh basket. Trials of push-merchandising kit will help them move store hours away from ambient to fresh (although I doubt they'll let suppliers off the shelf-ready packaging hook if it rolls out!), but you mustn't ignore the ambient departments. If this area starts to look scruffy, unfilled and unloved then that just makes more shoppers see Aldi as an acceptable alternative, no matter how many different SKUs of pesto you range.

The ambient area has also now been effectively sold off to suppliers with branded POS taking over two aisles, but in a standardised way which allows no sensitive care of a category's or shoppers' needs. And of course, is again liable to poor execution:

Events are also being sold off - Homepride Sauces somehow getting into two consecutive events this year...

Ok, so you might be able to justify "world kitchen", but Big Night In? Really? Expect them to also feature in the World Cup Event too!

This kind of brings me down to ranging and the cult of Dunn Humby that is killing off initiative and retail nouse in the trading departments in the same way that an out of control Support Office killed off spontaneous thinking in stores. I won't repeat my views on big data - you can read a previous blog for that - but the reliance on clubcard data is getting worse and the data is blindly followed, now also by suppliers coerced into buying the Shelf Review Tool. Two worrying facts - firstly, even with the larger samples of clubcard data now used for modelling, it is still dependent on Clubcard, a scheme where penetration never went far over 50% and is painfully low in Express and Metro format stores. Yet, this is still regarded as the best guide - and the appalling ranging in some categories in the smaller formats is testament to this. Secondly, the tool has it's final "need states" set by a supplier. If you have two suppliers involved, both will set it differently to meet their own objectives so it will be inherently flawed. But hey, they've paid their money, right?

Admittedly, the crazy city culture that puts quarterly growth ahead of long term thinking isn't helping Clarke. Tesco had what looked like the start of a pragmatic store/shopper led strategy with clearly defined mission based store formats, but to execute things properly you need a steady team at the top and a fiercely loyal team in the stores. You don't need a leader who comes over as flaky and seemingly powerless against discounters and the insipid yet cosy world of Waitrose. Tesco got to be so big through hard graft, a unwavering sense of self belief, an effortless simplicity of message and near worship of the shopper.

Now it's looking at the Dunn Humby tea leaves at "loyal" shoppers and increasingly desperate attempts to hold onto an unsustainable market share. 

As for Clarke, I actually like the guy - he is a good retailer, just a terrible leader. If Tesco get flounced during the summer (massive trading this year with World Cup and Commonwealth Games), then I wouldn't be surprised that he doesn't get the chance to oversee another Christmas.

Moriturus te saluto, etc

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