Tesco’s ‘insipid marketing’ and price cut wars have turned it into a ‘listless titan’ says Retail Remedy chief consultant

By Jessica Davies | News Editor

Tesco

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June 4, 2014 | 3 min read

Tesco has failed to turn around its fortunes, despite its six-point plan which saw £200m invested in price cuts, which has now left CEO Philip Clarke in a vulnerable position, according to Phil Dorrell, director of the retail consultants, Retail Remedy.

This morning the supermarket giant released its latest results, which saw UK sales growth drop 3.8 per cent year on year.

It claimed its recently launched Clubcard Fuel Save scheme, and a cheaper online grocery service is increasing its competitiveness, despite a group sales fall of 0.9 per cent for the last quarter.

Dorrell said: “In the face of tumbling overseas sales – down 8 per cent in the quarter – Tesco is attempting to use its core UK market as a lifeboat.

“The trouble is it too is sinking. For every hole Philip Clarke patches up, another leak springs. The Chief Executive’s optimistic talk of building long-term loyalty can’t hide the fact that by the key yardstick – like-for-like sales – the good ship Tesco continues to sink.

“Such rapid decline is unprecedented in the brand’s proud history as the number one grocer in the UK and number three worldwide.

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“The CEO’s six-point plan is barely visible save for in a few select stores, and the £200m invested in price cuts has failed to turn the tide against the discounters.

“Somehow there seems to be a sullen inevitability to the underperformance. Insipid marketing has done little to raise expectations from the listless titan.

“As the captain of a sinking ship Mr Clarke will feel increasingly vulnerable. Most of the others he might have blamed have now left the boardroom. He’s unlikely to go yet, but he will have little choice but to do so if things do not improve by next year’s AGM.

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“If Tesco’s longed-for turnaround is to come, it has to be made in the UK. The sideshows of Europe, Turkey and even China mean little at present and the credibility of the current team depends on clawing back UK market share from Aldi and Lidl.

“It needs to rethink its pricing strategy and get behind it with a marketing campaign that people can believe in.

“Tesco should forget about phoney price wars and declarations of spend. If consumers cannot see an improvement in the Tesco shopping experience or a change to the brand’s image in the press, both sales and footfall will continue to plummet.”

The supermarket is also losing around 1 million customers each week as they look to rivals such as Aldi and Lidl instead, according to data from Kantar Worldpanel.

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Tesco plc, trading as Tesco, is a British multinational grocery and general merchandise retailer with headquarters in Welwyn Garden City, Hertfordshire, England, United Kingdom.

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