Friday, 13 February 2015

Tescos - The Devil Is Not Always In The Detail

In response to a downturn in fortunes partly due to adverse PR from a couple of monumental mistakes the big Tesco machine has decided to retreat. Some 43 stores across the UK will be closing and some big developments will not be going ahead. A news article today has some details at 
This strikes me as the wrong strategy. It is not as if there are not still massive profits being turned in. They are not actually short of cash. Closing some stores is negative PR (again) and a reduction in the potential opportunity for income. Empty sites underline the idea that Tescos are not doing very well. In fact they are doing well, just not so well as they used to do. 
A giant Tesco Extra opened in Newport a couple of years ago. From the beginning it was obvious that something was wrong. Rushing to open it against the competition (Morrisons opened just down the road a week earlier!) it seemed poorly laid out and not well managed at the start. It was just too big. By the time you had traversed the aisles and discovered you had forgotten the sugar you were some distance away. 
It works better nowadays. The management has got to grips with it and though there are large areas of unused floor space it is now better organised.
One solution to all these closures and mothballed stores would be to adopt more of the policy they already have for including other enterprises in the main store. A number of small units and kiosks operate within the Tesco store building. Expanding that idea along the lines of a mini shopping mall would attract people to the Tesco store as well. This is the opposite to the current thinking which has people attracted to the units, because they are already in the store for Tescos. Department stores have been doing this for decades and still maintain their integrity. 
Keep it simple is my advice. My feedback to their recent survey on Price Matching was that it was not so important as they thought. Penny pinching over their rivals and in the process doing damage to the economy in the long run only generates more bad publicity in the end.
I am not used to giant supermarket chains phoning me up wanting Bob Shepherd Associates as consultants but the principles of a qualified external view, coupled with management strategies and basic business principles are there whatever size operation you have. The devil is not always in the detail.

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