May 26, 2017 Industry news
At the GS1 UK industry conference, part of the wider GS1 General Assembly, Dave Lewis spoke openly about the well documented difficulties Tesco were facing back in 2014 and what they did to turnaround their performance.
Putting customers first
“We decided that every time we make a small change, that’s when we can really make a big difference. Customers want good service, a good range of products, at a good price. Without that, business declines.”
Since they began, Tesco have been widely seen as the best at running shops – they did this for well over a decade. But when things went wrong a few years back, they needed to refocus – everything had to be about serving the customer.
With the vital input of Tesco colleagues, they rethought what the organisation existed for. And the result? Well, inside the business now, wherever you go, you will see them say, “serving shoppers in Britain a little better every day.”
They invested in many areas. They reviewed their product ranges and store layouts – as it was sometimes hard for customers to navigate around the stores. They looked at their delivery services to measure the convenience. And they looked at their availability of products. And at the same time, they lowered their prices by 6%.
Differentiating themselves from the competition
“The ability to differentiate yourself from other companies when selling branded products is difficult, which is why we have promised our customers that they’ll never be more expensive in our store and they’ll get a brand guarantee.”
One example of how Tesco differentiated themselves was their own ‘Free From’ brand, which started back in 2003 and has grown to be an essential part of the store’s range. Their success was spectacular. They were awarded the ‘Free From
Retailer of the Year’ in the UK three times in a row. And though Tesco have 28% share in the grocery market, they have 4% in the food intolerance market.
Helping customers to help themselves
“We set ourselves some guidelines; we will only change a product in the business if we can improve the taste and health profile. For the first time in 20 years, we have put food right at the heart of the relationship with our customers.”
Health is a big issue. Customers at Tesco want to be eating healthier, but it’s not always easy.
- Customers don’t understand it – the government might want them to understand it, but they don’t, especially in terms of saturated fats and salts
- Brand owners often charge more for healthier alternatives
- Customers find it hard to spot the healthier alternatives
Recent in store activity by Tesco, they pulled together alternatives side by side – what people typically buy, and the healthier alternative. It’s something Tesco call “Little Swaps.”
“Two things happen with this. We give you the nutritional information to show what the swap is, and we put all promotional money into healthier alternatives. Then we invite our customers to help make that change.”
The vital role of GS1 standards
Dave concluded his speech by explaining just how important GS1 standards are to Tesco…now and in the future.
“We had a poor relationship with standards...but our supply chain partnerships became crucial and we completely reformed the way we engaged with our suppliers. After seeing volume decline, volume is now growing. We went from being the worst in terms of availability to being the best in the UK.”
“The Digital DNA programme will help us to serve shoppers a little better by providing them with better information, be it nutritional, be it quality, be it provenance. The ability as an industry to share information better so we can serve customers exists.”
“The use of embedded barcodes, like GS1 DataBar, stops us wasting food.”