Is Tesco a fading star?

Here in the UK one of the biggest advertising accounts is up for grabs worth £100m+ annually – Tesco.

For readers outside the UK some very brief context. The global financial problems have hit the high street with a number of retailers experiencing big challenges. We have seen a number of familiar names go out of business with others struggling to keep afloat. Tesco began to feel the pinch in 2011 and they have started to lose share. Up to last year Tesco had been a powerhouse of growth.

The question now is can a change of advertising agency address the slide or is it no more than window dressing?

Some years ago I produced a model of markets and how brands can rise and fall over time. In summary it suggested there are three stages in the life of most brands – rising stars (e.g. Virgin), orbiting stars (e.g. M&S) and fading stars (e.g. Argos). The dynamics of each stage are dramatically different and have a profound impact on the management of a business in the three stages. Why brands move from one stage to the next is complex and each has its own reasons driving the movement.

Given I have zero facts on the situation with Tesco I can only make some broad observations.

First the obvious point. The public at large is under pressure and watching what they spend on what. So demand is changing and grocery retailers need to be fast on their feet to adapt to these changes.

Second, market saturation. Has the grocery market hit or getting close to saturation in terms of store numbers? The massive increase of the smaller stores – Local, Express, etc., – has meant there is a Tesco or Sainsbury’s or something similar on every high street, often in head to head competition.

Third, my model of rising, orbiting and fading stars. This can be quite a cruel dynamic as the shift from rising to fading star can be in the blink of an eye. The usual cause us a lack of forward navigation, no active radar bouncing back intel on the market place. In the case of Tesco my observation is they were on a clear trajectory for years and it would have been understandable to assume it would keep going. I would suggest though they have drifted in to the fading star zone and woke up one day and the alarm bells started ringing.

The problem being in the fading star zone is being on the back foot. It’s like trying to fix the hole in the Titanic. Fading stars have an accumulating set of problems, in particular with their public profile. Tesco have been the darlings of the Stock Market for a long time but journalists can do an about turn on a sixpence.

This brings us back to the advertising review. What is the brief I wonder? Does the review hope to find a fresh angle to pin Tesco’s colours t0 and help get them back to being a rising star again? It’s a big ask unless Tesco have a secret weapon. Today any new advertising idea would be like painting lipstick on a gorilla; in an ideal world a new advertising idea should be based on substance Tesco is able to deliver in their stores.

The core problem Tesco has today is a lack of personality when compared with other brands such as Waitrose, Sainsbury’s, M&S, et al. I don’t mean the personality of a celeb but it does help if relevant. I think it is about what Tesco ‘stands for’ – in my head it just convenience and little else. I will travel further to go to Waitrose because it is a much better experience and the produce is better.

If Tesco do not have a secret weapon in the locker then I do not envy the agencies being asked to pitch. At the end of the day £100m+ is a very big prize, as is the brand, but the challenge is going to be the brief. What is it asking for if nothing else changes?

I’m thinking the answer will be a new face of Tesco, someone familiar to the public, possibly adding a little aspiration to ‘position’ Tesco as little more upmarket (Bill Nighy?), with some new in-store services more like Waitrose I suspect. If I was in charge of Tesco I would experiment with a new store sub-brand – Tesco Plus. Change my local branch in Maida Vale to Tesco Plus and sell better quality products. It could be a  gold mine but they just have a limited range of the usual Tesco lines so Waitrose is the default store. (Mind you I was in the queue with Paul Weller recently so it can’t be too bad!)

It will be very interesting to see how they all get on, agencies and Tesco.

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