Tesco claims customer trust at a four year high as resurgence continues
Tesco has cemented its turnaround from the bleak position of two years ago, claiming that customer trust is now at its highest in four years.
The fact that trust is greater than before the damning £250m accounting scandal is testament to chief executive Dave Lewis’ strategy of not trying to “advertise your way out of a problem you behaved your way into”, who today (5 October) revealed the retailer’s third consecutive quarter of sales increases.
And while the effect of overhauling of its marketing team and agency roster in 2014/15 cannot be overlooked, Lewis was keen to show that the resurgence has been down to the work it has done on simplifying the range and introducing new services rather than celeb-fronted adverts. The decision has ruffled brands such as Ribena and Carlsberg, which were cut amid a wider cull of 90,000 products in 2015, but steady growth over the last nine months proves it was the right one.
“We have some very encouraging signs in terms of how [marketing] is contributing and we have a lot of opportunity to improve,” said Lewis on a press call today. “But if you were just to look at our ads and not the other ways we’ve engaged, you’d miss the totality of the marketing mix.”
In the past year, it has ramped up its click and collect service, invested heavily in Scan As You Shop to improve the in-store experience (something which has been coupled by an additional 12,000 staff on shop floors) and inked deals with the likes of Holland and Barrett to broaden the offering.
This is what has really underpinned the marketing strategy, as brand director Michelle McEttrick outlined when she first joined the company.
“When I think about where you start [rebuilding trust] it’s not with marketing. It’s with an inside out approach to rebuilding your brand; especially when you have 320,000 colleagues in the UK,” she said at an industry event last year.
Lewis said that today 78 per cent of colleagues recommend Tesco as a ‘great place to work’ (up from 70 per cent in the first half of 2014/15), something which is filtering through to the way staff engage with customers.
However, that’s not to say that traditional marketing hasn’t played its part. The injection of humour into its star-studded TV ads last year came in contrast to the price-focused campaigns of competitors. And as Asda and Sainsbury's still try to find their feet with their tone of voice, Tesco has seeminly established a much-needed sense continuity to the brand.
Lewis also talked up its digital efforts, saying it is seeing the rewards from investing more into “a more personalised way of communication”. However when questioned further on this by The Drum, Lewis was evasive around future plans but said that social media has presented a "significant" shift in investment.
"We made a decision 18 months ago to redirect our investment and engagement with customers, so you saw us change from traditional above the line in to more personalised social media. We’ve had a lot of success and good feedback from that and as we fine tune the returns that we get from that engagement, our mix will change but it is a significant shift in investment. I can’t say much as that is for us to know and you to find out."
But, challenges could yet be on the horizon. The fallout from the accounting scandal is ongoing, with a group of shareholders threatening legal action over claims they lost £150m as a result.
Lewis dismissed how much it would affect customer perception, saying “people judge a brand more on their personal experience in-store, not what they read elsewhere”.
Overall, UK like-for-like sales grew 0.6 per cent in the first half of its financial year to 26 August.