Chris Edger, Professor of Multi-Unit Leadership at Birmingham City University, comments on Tesco’s falling sales.

In today’s revised H1 statement which declared a 4.6 per cent drop in sales and significant profit adjustment, the new CEO of Tesco Dave Lewis said that the Company’s three immediate priorities included; recovering UK competitiveness, strengthening the balance sheet and building trust/transparency back into the brand.

What did this mean? Essentially, over the last six years, as Tesco has milked its UK business to fund foreign adventures it has – as the CEO has remarked – lost the trust of customers. But over what? Yes, it has been perceived to act high-handedly with multiple stakeholders (customers, suppliers, media and local communities) but one thing, as regards to trust stands out – that of pricing.

Back in the day, customers felt that they were – on balance – getting great value from Tesco on their food purchases. However, the Hi-Lo strategy it has pursued over recent times, bouncing products in price to both ends of the spectrum, has led to confusion amongst customers. Asda, on the other hand has – it can be argued – been far more transparent and consistent on pricing; regularly winning The Grocer’s weekly basket price challenge and transmitting an honest message (which is backed up with action) to its customers on value.

In terms of direct competition Asda, (more latterly) Morrisons and the hard discounters shout EDLP (everyday low price) in a transparent manner. They are not opaque, in the sense, they hike-crash-hike again or use points/card systems as a confusing tactic to give customers the perception of value. No, they are fighting on straight transparent pricing platforms. And that is where Tesco needs to regain the trust of its customers.

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Chris Edger

Chris Edger

Professor of Multi-Unit Leadership at Birmingham City University