Tesco as a business isn’t doing badly. It’s profits are still huge, even if they are slightly down on previous quarters in the UK.
But for me, this is masking a much bigger brand problem and that is because nothing they offer is special any more. They don’t make customers feel valued, they don’t surprise or delight us, they just keep chipping away at prices by chipping away at suppliers who have no choice but to chip away at the quality.
We have always believed that the way a brand should behave is to decide a price and then see how good you can make the product for that target price. To me, Tesco look like they are aiming to produce all of their goods as cheaply as possible and not seeing how good they can make them for the money.
This is a short term profit boost that leads to long term decline.
Look at the section with motoring and cycling products. If you are even slightly into either pastime, you will see that what they are selling is utter crap and not cheap either. This is one tiny category in a huge store, but it’s reflection reaches far and wide in perception. If everything in the store is as badly produced and as nasty as this, why would I trust the brand overall?
Unless they up their game, start focusing on quality again and start treating their customers as intelligent individuals who do have a choice, this will be the first of very many profit warnings to come.
Johnny Lyle's new brand thinking 