I’ve mentioned before my somewhat unfashionable admiration for the supermarket giant Tesco…
…and lately they do seem to have slipped a little.
From the US debacle of “Fresh and Easy”…
…to lagging sales and profits.
There are some serious concerns that they have ended up in the worst of all business positions…”stuck in the middle”. In early December, analysts at the broker Bernstein expressed concern that Tesco has raised its prices faster than rivals in the last few years and has lost its differentiation. They said:
” Tesco is not value, not quality, just everywhere. Tesco is now in an impossible position: it is neither value nor quality and can’t compete with either the quality or value retailers.
From being within 1% of Asda’s prices, the gap is now 5% to 9%.”
Against this background, I have been following the relaunch of their own-label “Tesco Finest” range (announced at the beginning of October).
At first glance there might seem to be a mismatch between the main Tesco brand and positioning (very much middle, perhaps even slightly “down” market) and a range that is very definitely pitched as premium and upmarket. Tesco even sponsored the TV show “Downton Abbey” as part of the launch campaign.
Tesco management strongly denied that they were attempting to muscle in on the “premium” sector and take sales away from the decidedly up-market supermarket Waitrose. But one interview I read at the time of launch did cause a few raised eyebrows when the Tesco senior manager seemed to suggest that Tesco could serve all market segments, indeed it was their strategy to do so.
Now, as a big fan of the work of Al Ries and Jack Trout and their concept of “Positioning” I am always somewhat sceptical of claims from companies that they can successfully serve a broad market.
But…take a close look and the picture is a little more complex.
Hope you enjoyed a wonderful Christmas!
