I know, because I am one. So it comes as no surprise at all that Tesco’s bid to lure footfall and wallets has slumped over Christmas.
I’m going to share with you why I think – why I know – that this has happened and what the company need to do to get back on track.
Let me be brief, and let me be honest.
Tesco’s problem is not in providing a low price service to their loyal customers.Their problem is that they’ve created a low value service with their Big Price Drop.
As a loyal – and loyalty card waving – multichannel Tesco customer, their Big Price Drop campaign has moved them into the realms of Lidl, Morrison or Aldi as far as I’m concerned.
Their own campaign has redefined their market positioning – downwards.
Before Christmas, as they rolled out the Big Price Drop, they ceased to compete on value and started to compete on price.
Competing on price is a race to the bottom.
If I want an overtly price sensitive shop and am not too worried about buying anything special or particularly tasty, I’ll go to Asda or Morrison’s (branded alcohol, branded frozen produce etc is generally cheap by volume).
If I’m feeling flush and want something terribly posh, I’ll head over to Waitrose or Sainsbury’s. But I won’t shop there regularly. I’m not made of money…
Before the Big Price Drop campaign, Tesco filled the middle ground nicely. Now, they’re competing for the cheapest basket.
And because I shop at Tescos, a firm competing for the cheapest basket, I feel cheap myself.
I’m looking at the cheap graphics that are obviously competing only on price, and wondering where the corners have been cut (see this shelf-front image – cheap and nasty or what?)
I’m looking at my bill and wondering why my prices haven’t dropped that much (Big Price Drop is obviously on everything that I don’t buy).
I’m looking at the competition and wondering if I should give them a go. Because they’re just as cheap, if not ever so slightly more so. And if there’s little difference in price, there probably isn’t a difference in quality. If there’s little perceived difference in quality, then I am more likely to take a risk and try something different.
So here’s a simple suggestion to stop slumping sales.
Tesco should stop competing in a race to the bottom and start concentrating on value once again.
Don’t Drop Prices.
Show me how much more I can get in my basket for the money.
This is a subtle, subtle difference, which needs to be reinforced with messaging about the quality of their low-rate goods (i.e. ‘value’ product ranges still taste good even if they’re a 10th of the price of the branded product).
Competing on value is a race to the top.
How can we give our customers more value? How can we make a £1 own-brand frozen dessert taste like a £5 frozen dessert from a competitor?
How can we give our customer something special back? How can we engineer the prices so that they can afford a bottle of something nice to drink with their meal, for the same price as the starter and main course alone in a competitor’s store?
How can we give more to make more?
How can we race up, not down.
I guarantee that if Tesco are willing to ditch the Big Price Drop and focus on value (of which price is a function), they’ll see their sales slump cease.
Whether they will or not is another question entirely…
The images used in the body of this post were discovered on an excellent entry on the UK Retailers Blog – a great source of insight into current goings-on in retail-land.