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Can Tesco top the supermarket charts this Christmas?
Claire | October 10, 2012
In terms of Tesco’s market share, 2012 hasn’t been the best year by a country mile. The company irritated buyers by slashing the value of its Clubcard scheme in September 2011, knocking thousands of pounds off the potential savings that could be made by its 15 million Clubcard members.
Around the same time – and for the first time in its history – Tesco started to lose traction.
The Big Price Drop campaign last Christmas was marketed as a way to save money on a normal shop. Customers didn’t agree. Tesco justified the change in tack by saying it wanted to provide more back-to-basics price reductions. Asda, its main rival, hit back with a guarantee that it would always be 10% cheaper.
Meanwhile, Philip Clarke, the company’s chief executive, gave the green light for a £1 billion scheme – which includes more than 150 different initiatives – to try turn fortunes around as shareholders began to fret. His initiatives included a complete rethink of the Tesco Value range. Relaunching the brand meant getting rid of the tired plain packaging, changing the name to Everday Value and marketing the products as a high quality, cheap alternative to branded produce.
It’s an approach that has served smaller rivals like Aldi well; the budget supermarket rival has built its entire marketing strategy on the back of providing this kind of economical alternative to high-cost food. In contrast to Tesco, Aldi have reported a massive 29.4 per cent increase in sales in a year, reportedly stealing up to a million customers from its rivals. Waitrose were also quick to take up the slack and pick up on the low-cost trend, dropping the price of more than 1,000 products to match Tesco – and providing an arguably more modern shopping experience in-store.
But bricks and mortar are also a sore point for Tesco. Ten years ago, Tesco’s rapid expansion began to irk its customers. The chain ended up holding a massive 30 per cent share of the market and won the ‘space race’ for planning permission and seemingly unstoppable expansion. Then customers realised they could just as easily shop online, and even the sheer quantity of Tesco stores did nothing to shore up its position. While Tesco’s UK reputation slipped, its overseas stores began dragging the company down further. Its chain of US grocery stores have yet to turn a profit in five years of business, and its strong presence in South Korea has been hampered by new laws designed to protect local retailers against multinational chains.
So can Tesco turn fortunes around this Christmas? They’ve already started whetting our appetites with new Fifa 13 mobile adverts that target customers within walking distance of a store. This is a good sign for the supermarket company: the fact it’s looking ahead to mobile marketing suggests that it’s prepared to modernise its approach. Another ad campaign strongly promotes home delivery, recognising the fact that the days of huge hypermarkets are perhaps behind us. Shifting focus to mobile and online is a promising step for the fallen giant, but the real test will come when the festive season rolls around again.
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