The Drum Awards for Marketing - Extended Deadline

-d -h -min -sec

Harris & Hoole Tesco Marketing

Tesco looks to have found its groove as it reports landmark sales rise

Author

By John Glenday, Reporter

June 23, 2016 | 3 min read

Tesco’s recovery is seemingly back on track after it reported the second successive quarter of underlying sales growth for the first time in five years.

The landmark achievement is vindication of the wholesale – but sometimes controversial – changes chief executive Dave Lewis has made since taking the reins in 2014. Sales rose 0.3 per cent over the 13 weeks to 28 May, building on the momentum in its final quarter for its last financial year when it posted a 0.9 per cent lift. Looking beyond the home UK market to the world as a whole, the group performed even better, posting a 0.9 per cent rise on the same measures.

For a brand that last year posted the largest ever loss on the UK high street, the return to back-to-back quarters of sales growth for the first time in five years will likely give it the confidence to press ahead with its fightback in the price war with its rivals. A management structure, aggressive rationalisation of its products and the removal of non-core businesses like Dobbies and Giraffe Restaurants have given Tesco the armoury to push forward amid falling food prices, which many experts believe won’t let up for the next two or three years.

Alongside these business changes, the brand has been recalibrated following the appointment of BBH in 2015. The agency, alongside brand director Michelle McEttrick, who joined from Barclays last year, have since focused on getting to grips with why people should come into Tesco stores over its rivals.

“It is clear that Tesco have moved closer to customer insight-led retail operations from recent store visits, moving beyond just putting sandwiches by the front door. Although they are looking good, Tesco are still a way from being best,” said Phil Dorrell, partner at consultants Retail Remedy. "Project Reset has taken on average 18 per cent of the range out across 33 food categories, improving ease of shop, availability (very marked), and volumes leading to lower prices and what should be increased margin. The change is both company and customer friendly, a rarity in food retailing.”

The challenge for the retailer is to keep up the momentum. Amazon Fresh won’t help but Tesco’s vast size is an advantage as it allows it to keep down prices for longer than its rivals. In the current war of attrition, this could prove decisive, claimed John Ibbotson, a consulting partner at Retail Vision.

“Tesco's rate of growth is paltry compared to yesteryear and the future promises low profits and slow sales growth. But given the huge challenges Tesco is facing, this performance by Dave Lewis has to be applauded."

Harris & Hoole Tesco Marketing

More from Harris & Hoole

View all

Trending

Industry insights

View all
Add your own content +