Tesco has been queen of shops for most of our working lives. But is their reign about to come to an end? In the wake of a disappointing trading statement and a £5 billion slump in its stock market value, customers are legitimately beginning to ask: what’s the real value of Tesco to me?
One look at the giant supermarket’s proposition, Every Little Helps, tells you everything you need to know about why Tesco has been so successful for so long – and why it has finally stumbled. Ask yourself what it says to the shopper. One of its key subliminal messages is that ‘We’re on your side and we know that every little saving we give you helps to make your life easier.’ Price is a key part of the message.
Tesco has underpinned its proposition with a series of price promotions over the years designed to make us believe that we are saving real, hard-earned cash.
The first problem is that customers have started to believe these savings aren’t real. The notorious £4 chicken (or rather, allegedly, the £5 blink-and-you-missed-it chicken) is a classic example.
The second problem is that, according to many commentators, shoppers never really much liked Tesco in the first place. Its ruthless expansion, bloated high street omnipresence, and tired and utilitarian store formats have created a growing unease among customers. It’s the brand we’ve all supported by default, but without any real enthusiasm.
And the reason? Because for years it’s been our nearest and cheapest supermarket. Take away the ‘cheapest’ part of the equation, particularly in these austere times when people are shopping around like never before, and what’s left? How hard can it be to drive a few extra miles to Sainsbury’s or Morrisons, if we feel that they are offering us real – rather than illusory – value?
Here’s a thought. Who really likes flying with Ryanair? We travel on their planes because they’re cheap as chips, with no pretence at luxury and arguably only a passing acquaintance with customer service. Take away Ryanair’s low-fare advantage and how long do you think the airline would survive?
When your value proposition is solely about price, there’s only one way to go when you lose that price advantage. Could Tesco be about to find this out?