Tesco - Tough at the top
23 June 2015
For those Minions fans on the readership, the new film is out this weekend and Tesco are in the mix here, a good range and this is a license to print money essentially - particularly when a film is released.
Good to see Tesco a bit more on the front here, in the dark days they lost their way with events as a whole.
In the new world of Supermarket financials, we have to get away from like for like. It's simply not the only way to judge a retailer performance - particularly with the Germans on the doorstep taking volume away.
The secondary measures of customer numbers, basket size and indeed volume are now far more important. The discounters have taken lots of volume away from the big retailers, their lower prices mean customers happily convert more of their shopping to the lower priced discounter.
When prices are cut, volumes should increase but its a race to stand still. Cut the prices by 50% and you have to double the sales, and that's just to keep sales rates (on a cash basis) where they were.
However when selling 50% more (at half the price) that also costs in terms of staff, transport, replenishment etc. Not easy.
What customers don't want to see is promotional lines (whether part of cheaper prices or not) out of stock. Customers may make special trips to stock up, only to find it out of stock. Frustration then grows and the customer feels 'conned'.
It's a problem throughout the industry to be fair, but stocking promotions is almost a given, and some stores were light, perhaps due to increased customer numbers?
Retail is always about the basics, these shippers are paid for by Nestle (in this case) to site their new products. A wise move and it can work when appropriate, not when siting shippers all over the shop (literally).
However opening the boxes and putting a price on is another basic, sadly not done in this store. My question would be, how have the store management missed this? There are enough hours in the business, so how can it be missed?
Also spotted were unopened cases on the ladder rack, left over from the night shift, but again poor management at a ground level.
There are far fewer own goals at a ground level though, it was open season in the past and the phone would overheating within 5 aisles. The influx of hours has really improved matters, but there needs to be a focus on continuous improvement too.
The tolerance for 'errors' is less given the tools that the stores have to do the job.
The 'finish' on the store post night shift wasn't sharp enough and given I was in store c.11am - it should have been resolved.
As we circle back to ranges (more to come on this later in the week), new additions to the range are given more scrutiny given the backdrop of 30% SKU cuts.
As a hard / fast rule it is appropriate given the bloating range and the poor performance of some categories. However consultants (not like me....) getting involved with 'big data' worries me, it is never that simple.
Timing is a concern, the retail calendar is notoriously tight. Once a category has been relaunched, a short time after, the planning starts for the next review.
September is early Christmas, flowing to Halloween, Bonfire night and then Christmas.. There's at least 2 months lost there where colleagues are looking at key categories for peak trade.
There are some categories that will be performing well (there has to be) with the increased ranges. What about those? You can't cull those ranges and hope every customer will happily filter their purchases into other lines.
A poor selling line may be purchased by the most affluent customers, data says remove. However removing means that customer goes to Waitrose to get it (and takes their £150 a week / £600 a month / £7500 a year (bit more for Xmas)) shop with them too.
Rationale aside on the cuts, who made the decision to add in £16 drums of Cadburys Drinking Chocolate?
It's just beyond my comprehension.
One step forward but as so often, one step back too.
However they're at least making some forward progress now, but it'll take a while to resolve the basic operational issues and ranges before any new world strategy takes hold.
From the Grocery Insight newsletter archive, first sent to subscribers on 23 June 2015. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.