As the retail world circles, it’s now nearly a year since ‘Drastic Dave’ arrived at Tesco – and two years since Watford Extra reopened.
Watford promised to revamp the shopping experience forever, but it ended up putting paid to Philip Clarke’s tenure as Tesco’s chief executive.
The Clarke era was littered with mistakes and failure to act upon the glaringly obvious – the state of the supermarkets in which customers shopped at, day in, day out.
In the face of criticism that Dave Lewis was not a retailer, he responded in the early days – in the midst of the accounting issues – by warning on profits and reducing some prices and investing hours into stores.
“The Clarke era was littered with failure to act upon the obvious – the state of supermarkets”
Steve Dresser, Grocery Insight
Clarke had tried to do this in the early days of his reign, adding colleagues to service areas such as checkouts, fresh foods and wines.
Key areas such as grocery (where the discounters were stealing customers and volume) weren’t helped in phase one – in fact we never saw a phase two as the numbers never improved to fund it.
When the sales line didn’t improve – save for that Christmas when it essentially bought the Christmas shop with a plethora of vouchers – Tesco reverted to type, cutting costs and ‘saving over serving’.
It is never a long-lasting strategy and when Chris Bush stood up at an investor day, noting that “cost saving was in our DNA” he had said it all.
Stores were poor for too long, they were never able to resolve the operational issues caused by too few hours in the business.
Cleaning fell to the bottom of the agenda, stores weren’t filled overnight, availability suffered, queues grew and the pricing drifted to around 9% higher than Asda – let alone the discounters.
Added to that was an increase of around 30% in range – adding complexity to the shopping trip for customers, and to the operation for colleagues.
Often in Tesco it was too easy to highlight issues – clearance bays were riddled with out-of-date products, availability was poor on promoted items and if shoppers managed to get around the disappointing store environment, there was then a queue to spend their money.
Lewis reversed this with near-instant investment, stores recruiting new colleagues and offering overtime to get back on track. This benefitted business instantly at Christmas, with the ‘halo’ of better service and people on the floor aiding the customer service perception.
Colleagues are an expensive area of the business – people cost money in terms of pay, holidays, training, PAYE, National Insurance and sickness.
But they are also ambassadors for the brand, providing service, looking after the customer and using their skill and ability to fill the stores and maximise sales and profitability.
Making sure there is enough staff in the stores sounds basic, but we know how many retailers get it wrong, despite the millions spent in marketing and getting customers into store. Tesco was sending customers ‘across the road’ because of poor stores.
Not now. They’re much improved and recent visits have evidenced ample levels of staff.
However, with word that hours could be set to reduce ahead of Christmas will Tesco be able to sustain the improved store standards?
It’s only one piece of the jigsaw, but running great stores is arguably the most important piece of all.
- Steve Dresser is director of Grocery Insight