Tesco media launch was ‘moderate evolution of existing toolbox’ – it needed to be more

There was absolutely a recognition that there have been some shifts of shopper behavior, with an enforced jolt of more missions now being resolved online. And overall, an up-to-date narrative on the importance of data-centricity was clear. But for those of us deep in the world of retail activation, it felt like a moderate evolution of an existing toolbox, while the industry within which it sits is now a maelstrom of systemic and fundamental change.

2021 has been a year of revolution. Many media execs agree. So what are those changes? Where to begin?

Firstly, two of Tesco’s three biggest rivals by market share, Asda and Morrisons, have been through very high-profile changes in ownership this year. It’s probably too early to see what that might mean for Morrisons, but we have already seen the influence of the entrepreneur Issa brothers on all parts of the Asda ecosystem. From reworked loyalty propositions and experimental ‘Asda on the Move’ stores in petrol stations, to seismic shifts of workforce to accelerate their online business and new reasons to bring people to their classic ‘big stores’ by looking at sustainable ‘refill’ solutions – these are agile, fast-to-market solutions in search of commercial advantage.

Secondly, it might be the expanding competitive set that is giving Tesco the most cause for alarm. The simplicity and value of the German discounters continue to pay off, with both Lidl and Aldi continuing to grow market share. According to recent Kantar figures, that combined market share is now over 14% – about half the size of the Tesco share. Only 10 years ago it was around 5%. Both recently announced store opening plans – 480 more by 2025 – which means reaching more shoppers, more of the time, selling them the value promise of Aldi and Lidl private label. Which, ultimately, makes it harder for brand owners to reach those shoppers.

These are just the changes in the ‘traditional’ grocery set. Perhaps the greatest catalyst for revolution will come from ‘new’ entrants – none more significant than Amazon. In March this year it opened the first Amazon Fresh store to trial ‘just walk out’ tech, followed by a handful more around London. If we know anything about Amazon, it will try lots of initiatives – and anything seen to work will be scaled at pace. Lo and behold, in November it was revealed it is planning to open 260 stores nationally following the same model. And although a small part of Amazon’s total UK revenue, this will contribute to the expectation from various sources that it will replace Tesco as the UK’s biggest single retailer at some point in the next four years.

Of course, Amazon’s revenue has rocketed in the UK partly due to its peerless ability to deliver quickly – something we all came to rely on during the enforced confinements of Covid. While we were Zooming, a new type of grocery company found market traction – last mile, so-called ‘rapid delivery grocery’ companies exploded on to the scene with VC cash and startup confidence. We remain to see how this also shifts shopper behaviors.

Bringing this back to Tesco, the media propositions it owned were unique and powerful. As an FMCG brand, it was almost inconceivable to ignore it – the biggest retailer, the most sophisticated media platform and a very stable grocery marketplace. If you wanted to influence shopper behavior at scale, you had to invest. And at the same time, Tesco’s private label would be your biggest competitor. In many ways, it was almost a monopoly on market access.

But now, with all this change, these new shapes of business, digitally-native solutions and partners, is that still necessarily true? And we haven’t even touched the revolution in wider media, with the dominance of three platforms – Meta, Google, Amazon – now seeming to control over half of global digital media spend (outside of China). With one of these now a direct competitor in UK grocery to Tesco, are we at an inflection point where the game changes fundamentally? With the ability to navigate a customer journey from end to end, or fuel an ‘ecosystem’ of awareness, purchase and repurchase with rich insight... but only if you can afford to pay to play?

There might be more ways than ever to reach that shopper audience, more ways to trigger purchase and more ways of satisfying shopper needs. But the challenge is now that rather than having more control and transparency, reaching shopper audiences exposes you to a cartel of those even mightier media platforms (rather than just Tesco or one of the other major ‘analogue’ retailers scrambling to upweight their digital and data media products).

So what to do as a brand owner? There’s no doubt all of this disruption is fueling the rapid transformation of FMCG brand owner marketing plans to raise and orientate around first-party data. In the mass market, low-margin world of grocery brands, being data-focused was seen as expensive and unnecessary – simply securing distribution through that consistent and stable physical store base would be enough. But now, with every pound of media spend in the mix, it might be essential to avoid the inevitable price rises that follow any market consolidation.

And if a brand achieves critical mass with owned data, with the ability to communicate and incentivize their shopper base directly, the question will be for Tesco (and any retailer): how valuable will any of the new media products they have launched really be for those brands?