The likes of Tesco and Asda may not have the tech prowess of rivals such as Amazon, but they are very capable of shaking up retail.
When Tesco told customers they wouldn’t have to pay the so-called ‘tampon tax’, it was reminiscent of the old days.
In July, Tesco pledged to cover the cost of VAT on sanitary products – almost 100 in all and spanning own-label to branded lines – and as a result bring down prices by 5%.
The retailer said at the time: “For many of our customers, tampons, panty liners and sanitary towels are essential products.
“However, the cost of buying them every month can add up, and for many women and girls it can be a real struggle on top of other essential items.
“That’s why – as a little help for our customers – we are reducing the cost of these products.”
It made a splash because it had about it a feel of authenticity, the sense that Tesco as a mass-market retailer was addressing unfairness that was hitting its customers in their pockets – and it would take that hit on their behalf.
At one time such campaigns came thick and fast at Tesco and Asda. They were driven by a genuine sense of purpose. The retailers existed to make money, but they did it partly by democratising once-exclusive product and by generating volumes through keen pricing.
“Tesco even went to court to fight for its right to sell Levi’s sourced cheaply outside the EU – a legal battle it eventually lost but which nevertheless reinforced the grocer’s credentials as a consumer champion”
‘Nothing’s too good for our customers’ was the attitude as they shoulder-barged snooty brands and put their products on the shelves at knockdown prices – whether it was Levi’s jeans or Gucci sunglasses.
Tesco even went to court to fight for its right to sell Levi’s sourced cheaply outside the EU – a legal battle it eventually lost but which nevertheless reinforced the grocer’s credentials as a consumer champion. Tesco was a disruptor par excellence.
Disruption is the word of the moment but typically it is applied to online businesses, whether it’s Amazon, Uber or Airbnb.
Disruptive they certainly are as incumbents, characterised as the establishment find themselves under pressure as their business models look in danger of being outmoded.
But retailers who came to prominence in analogue rather than digital times have plenty of opportunity to disrupt too – they have a heritage of trouble-making that can usefully be deployed again, just as Tesco has done.
Something to fight for
The tampon tax intervention was the latest by Tesco, which once again is playing a deft hand in positioning itself as the friend of what Prime Minister Theresa May describes as ‘just about managing’ families.
It pulled off a blinder with last year’s Marmitegate row when, as food price inflation was becoming a headache for consumers, it drew a line in the sand.
It sent out the message that, wherever possible, Tesco would push back against suppliers on higher prices if it thought they were taking the mickey, or pursue a collaborative approach if it could keep a lid on rises.
Politics aside, May’s description was apt. Inflation is starting to bite. The latest grocery market data from Kantar Worldpanel showed that grocery inflation was 3.3% in the 12 weeks to August 13.
Kantar observed: “Prices have been rising since the 12 weeks to 1 January 2017, following a period of grocery price deflation which ran for 30 consecutive periods from September 2014 to December 2016.”
Amid ongoing uncertainty about what Brexit may mean for the UK economy and the fall in sterling’s value, there could hardly be a better time for retailers that have traditionally had value in their DNA to come out fighting – to upset the status quo.
In short, to disrupt the establishment groupthink that accepts, in the words of politician Harold Macmillan, ‘events, dear boy, events’ as a reason for inaction.
Adapting ‘events’ to advantage, fighting them and using them as a screen on which to project a differentiated, authentically populist position should be on retailers’ agendas.
As wage growth fails to keep pace with inflation, will not shoppers respond and remember those who took up cudgels on their behalf?
The message to consumers that “we’re on your side”, loudly and clearly expressed, is likely to resonate and be rewarded at the tills.
It’s not just relevant in food retail. Value and convenience has been at the heart of Amazon’s appeal in general merchandise. The online giant offers in-demand product generally at prices as good as, or better than, many older, formerly go-to retailers.
Amazon’s relentless focus on better constantly changes the game. Who would have thought just a few years ago that calling out an order by voice to a device in the home would be reality today? Voice search may turn out to be one of Amazon’s biggest disruptions of the status quo.
But could there not, and should there not, be more catcalls from other retailers?
They may not have the same technological knowhow or investment firepower, but by drawing on what originally made them great, they do have weapons in their armouries, as Tesco has shown in recent months.
Making an impact
Looking across retail generally, what are the opportunities to offer astonishing value rather than kneejerk price competition? Where are the big gestures that make as big an impact on shoppers’ emotional attachment to particular retailers as they do on their purses?
We’re in the back-to-school period. Once that was a time for some retailers to take a stance, to condemn a cosy rip-off that costs families much more than is necessary.
It was calculated by Oxfam in July that it costs £36,400 to equip a child for 12 years of schooling.
The price per year for uniforms alone is often more than £100. The total spend per child per year, taking in everything from books and magazines to haircuts, was put at £3,033.35.
“There have been few audacious initiatives, little thumping of fists on behalf of the hard-pressed consumer – obvious exceptions being Aldi and Lidl, which upset the grocery apple cart in recent years”
Asda originally led the way on low-price school uniforms, blazing a path that others followed, and now a cash-strapped shopper could buy a uniform for less than £10 at a variety of retailers.
But compared to the past, it sometimes seems today that retailers’ willingness to helpfully cause trouble about the things that prey on ordinary people’s minds has been subdued. If Oxfam’s findings are correct, there must be more opportunities to bring down the cost of school and childhood essentials.
There have been few audacious initiatives, little thumping of fists on behalf of the hard-pressed consumer – obvious exceptions being Aldi and Lidl, which upset the grocery apple cart in recent years.
But there must be opportunities in abundance in these uncertain times for retailers to kick up a fuss.
If they get themselves in fighting shape, they can be heavyweight disruptors once again.
Action points for retailers
Fight for consumers
Disruption is becoming a business cliché, and a term that increasingly is only applied to start-ups and digital pureplays. Established retailers have the intellectual, financial and trading instinct firepower to upset the status quo when they spot genuine consumer need.
Where are consumers being underserved or paying more than is necessary? What categories are there further opportunities to democratise?
Renew your sense of purpose
Retail has thrived on disruption, long before that word was commandeered to the advantage of online players. How can you play to your strengths to rekindle the excitement that originally accompanied your promise to shoppers?