Daniel Lucht writes that no one should bet against Tesco and its transformation
Free report from The Retail Bulletin and Research Farm
Research Farm’s latest report “What Tesco needs to do now – A strategic blue print for a better future”, analyses four key strategic areas that the retailer needs to focus on: Clubcard, the hard discounters, on and offline non food sales and Tesco’s fledgling 3P marketplace.
The pressures felt now, will be felt by every player in the market and it is obvious that when radical change happens, that the market leader is the biggest sitting target and will hurt the most first, at least initially. That said, Tesco is still the most innovative retailer in the UK with a great culture of backing innovation and very talented employees.
While some analysts suggest dumping the hudl or even clubcard and return to the basics, turning the clock back to the 1990s is just not possible. The world has changed and giving up on the long term and its future focus would seriously damage the business. In many ways Tesco’s problem seems to be one of execution and the timeframe allocated for this, rather than strategic errors.
Never Miss a Retail Update!The report identifies a number of possible solutions to Tesco’s woes:
1) To restart its momentum in food sales, Tesco should regain the competitive advantage it once had through clubcard and reinvent the scheme for the online and mobile age.
2) To stop market share losses to the discounters Tesco’s should prevent Aldi and Lidl from expanding, which means buying up the best convenience sites. Historically price wars have not worked in other markets in slowing down the hard discounters, as any hypermarket operator will be unable to compete with a focussed, limited range EDLP hard discounter on a cost basis.
3) To battle in an omnichannel world that has moved from competition over retail spend to competition over all consumer expenditure, Tesco needs to tackle its non food problem. Tesco should double down on its marketplace and recruit far more 3P sellers, and make the marketplace central to the whole strategy for a new Tesco. The retailer needs to become as strong in non-food online as in food, and take on the fastest growing retail businesses, the likes of Amazon.
There is no magic silver bullet or simple solution, but a concerted effort of many various individual initiatives will deliver results, even though it may well take a while. If these initiatives are joined up, they will help Tesco to maximise the customer profitability of its loyal shoppers and make the retailer ready for the next decade.
