Tesco has an identity crisis. Here's what small businesses can learn from it.

APR 17

Tesco has an identity crisis but no matter what size you are you need to build a memorable brand with strong foundations and set a few guiding principles right from the outset.

Written by Steve Morris

Tesco has an identity crisis. Here's what small businesses can learn from it.

Tesco logoTesco may have said goodbye to their semi-iconic Value range and replaced it with a new 'Everyday' brand but that's not stopped the rot as they announced more bad news yesterday. The once all-powerful supermarket behemoth confirmed that profits are down by 6%. With their market share in a seemingly irreversable decline and customer satisfaction skimming under the 50% mark all it paints a pretty gloomy picture.

Opinion formers and industry analysts were queuing up yesterday to have their say; many seem to have drawn the same conclusions: Tesco are having a brand identitiy crisis. In the highly competitve retail food space they simply no longer appear to represent anything. 

So what does Tesco actually stand for? To understand the problem they face we need to look at the competition.

New kids on the block
The biggest challenge arguably has come from the new so-called budget brands such as Aldi and Lidl . They're are eating away at Tesco's market share having been embraced by the British middle class with something approaching gusto. These relatively new players have successfully positioned themselves as the 'no frills' alternatives where - as plenty of blind taste tests have confirmed - the only thing that's compromised is the finer art of in-store presentation. In austerity era Britain that's hardly seen as a negative - it just makes good sense. It's also interesting to note how they present themselves in their advertising, with the playful and self-confident swagger of the new kid on the block. Very 2014.

It's easy to see what Asda and Morrison's represent: big choice with big discounts for the big weekly shop; these guys have made successful incursions on Tesco's well-fortified hills. Sainsbury's can boast a long history, an emphasis on quality but on a budget ('Live Well For Less')—they sit comfortably between those big budget brands and the premium player Waitrose. The John Lewis food retailer stands firmly for high quality and enjoys a very loyal middle class customer base - and as a result boasts the highest customer satisfaction ratings.

Standing out in the crowd 
In the face of such competition and in light of their well publicised foray into other businesses it's not hard to see why and how Tesco might have lost ground to their rivals. Its 'Every Little Helps' tag line has less resonance in the light of Asda and Morrison's agressive and successful price war. So it's not the cheapest. It's not the best on quality. It's not the greenest. It hardly boasts the best record on locally sourced products. The harsh reality is that without a distinct identity for consumers to rally to it relies on just having a big name and a lot of shops—as one expert said yesterday "many appear to chose Tesco simply because it's the nearest."—but ubiquity isn't a good foundation for loyalty. When the chips are down and choice is abundant consumers will choose the brand they think best reflects their own hopes, needs and aspirations.

Although we're talking about a retail consumer giant I believe there are valuable lessons that can be applied to businesses of any size:

1. Stand for something
Create a brand persona, write a brand promise and deliver on it. Always. In competitive markets it's vital no matter what size your business is. Customers will stay loyal and find it easier to forgive your honest mistakes if you align with their hopes, fears, aspirations and dreams. 

2. Stay relevant
If you burst on to the scene years ago and made a huge splash it's dangerous to sit back and rest on your laurels. There's another business on the horizon ready to disrupt the market and the chances are they're leaner and hungrier than you. Stay alive to all possibilities and keep an eye on the latest technologies.

3. Deliver on the customer experience
Customers have choice like never before. You need to deliver the total customer experience from the very first interaction with your brand to the conversion and beyond. Yes, that means real time interaction at all points and at any time.

Whether you're a micro-business, startup or SME you need to build a memorable brand with strong foundations and set a few guiding principles right from the outset. Tesco could well turn it around because they can hire the best people and spend huge amounts of cash. You may not have that luxury when the going gets tough.

Written by Steve Morris on April 17, 2014

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