Tesco forgot their customers

Tesco forgot their customers’ value.

It’s been reported today (14th of October 2014) by the BBC that Supermarket giant Tesco has asked three more executives to leave their posts as the fall-out continues from its £250m profit guidance overstatement.  They take the number of suspended executives to eight.

Tesco said, “We have asked three employees to step aside to facilitate the investigation into the potential overstatement of profits in UK food.

The costs of their mistake

IMG_8878MI wonder how much the ‘profit overstatement’ impacts Tesco’s everyday shopper.   Why do people shop at Tesco’s or Morrison’s or Asda for that matter? What is it about that particular brand and reputation that entices shoppers through the front door? Is it anything to do with reputation and Brand? Or, is it more to do with cost?

Tesco’s moto of “Every little helps”, or in this case every little £250 million profits overstatement helps has come back and bitten them where it hurts.

How will Tesco carry out damage limitation?

The Impact

What has this done to Tesco’s reputation and brand? Has this indiscretion on Tesco’s part had a major impact on my thinking about future shopping at Tesco’s? Yes, it definitely has. Not because I see them as being dishonest or greedy or underhand, though as more and more news continues to come out, my thinking is changing. Not because it made me think badly of Tesco’s as a shop or the floor staff or even the products they were selling.   What I did initially think and potentially this is a little bit cynical; how will Tesco’s rake back the £250 million shortfall and how will that impact the prices and the service?

Tesco’s took their eye off the ball and fully focused on the shareholders. When in fact the primary focus should always have been and always should be on the customer experience.

Retail companies like Tesco’s or any company has to consider more than just the return, the cost, they must consider value add, they must consider quality, they must consider value for money, the key focus cannot remain on shareholder returns. For most customers we’re looking to get our monies worth; a level of service that meets our requirements and budgets.

The key point to remember with customer service is it’s not what the supplier believes they give, it is what the customer perceives to get out of it.

Unfortunately, for Tesco’s going forward my concern is how they (the board, the senior management team and let’s not forget the shareholders) will rake back the £250 million deficit. Will this be through reduced headcount with staff on the floor, will this be to increase costs of the products, and will this be a reduction in service and quality?  For me, Tesco’s must make a clear and transparent case on how they going to take the business forward.

In order to salvage what is left if anything of their positive brand and reputation they must put the wants and need of the customer first and get the shareholders on board.

I am not naive to think that businesses are just about the customer experience, I know from experience that it is also about making profit, healthy profit and good profit.  It is just that I believe that in order to do that, we need get to know our customers, their wants and needs and we convert that knowledge to providing the best experience in order that our customers’ perception of our service is top tier.

And on this note I look forward to observing Tesco’s PR campaign and its authenticity.

Changing Attitudes | Influencing Behaviours | Impacting Outcomes…


Margo Manning is Managing Director of Bute Learning and Development and Margo Manning Ltd. Margo is a professional speaker and Executive Coach.

Margo has been in the development arena for 20 years and more specifically in coaching for 11 of those.  Margo has worked with companies such as UBS, Goldman Sachs, AON, Balfour Beatty, Brunswick LLP, BBMV, Tower Hamlets Homes to name a few.

Contact Margo on +44 (0)20 3489 6734 or email margo@margo-manning.com.