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How Tesco lost hold on consumers

By Donald C McFetridge

Published 08/10/2015

Despite all the positive spin the senior management team at Tesco have been trying to put on its recent trading results, many believe it has lost its way in an increasingly polarised retail food sector
Despite all the positive spin the senior management team at Tesco have been trying to put on its recent trading results, many believe it has lost its way in an increasingly polarised retail food sector

Despite all the positive spin the senior management team at Tesco have been trying to put on its recent trading results, many believe it has lost its way in an increasingly polarised retail food sector. So, what went wrong?

First of all, it tried to be "all things to all people" and that simply didn't work.

It wanted to be the supermarket chain to which everyone from every socio-economic grouping gravitated, but failed to keep up-to-date with the changing consumer.

Even once-loyal consumers rapidly became irritated when Tesco continued its aggressive expansion plans in spite of the fact that it was obvious it was going, eventually, to cannibalise its own marketplace.

Stores in Ballymoney, Coleraine and Portstewart formed one example of an area with limited population density where, arguably, there are too many stores for too few consumers.

When the company was first established, the ethos was "pile it high, sell it cheap". More recently this philosophy changed to "get bigger, sell everything you possibly can under the one roof and name your price".

This doesn't - and won't - work because consumers are quick to realise when they're not being treated respectfully.

Recessionary times haven't helped. Consumers had to radically rethink their spending patterns and Tesco was too slow to catch on to how volatile the retail marketplace was becoming.

In the interim, Northern Ireland was witnessing a period of unheralded (and some would argue aggressive) development and marketing from the German discounter Lidl. Consumers were quick to spot a bargain when it arrived on their doorsteps.

The horse meat scandal and an investigation by the Serious Fraud Office further dented an already-tarnished brand image and - once again - consumers didn't like what they were seeing.

Consumer interests should be uppermost in the minds of retailers keen to retain a prominent position in the retail marketplace.

Because when Finest isn't that fine any more, customers are keen to point out that they can - and do - Taste The Difference - by shopping elsewhere.

  • Donald C McFetridge is a retail analyst at the Ulster University Business School

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