Troubled giant Tesco looks in new direction to turn round slide

Published on 31/07/2012 15:01

IT IS still by far the biggest supermarket in the UK – with sales of £79bn and pre-tax profits of £3.9bn.

But Tesco is losing ground – with sales down 1.5 per cent in the trading quarter to the end of May and analysts saying the retailer has become a victim of its own success and is seen as too big, too soulless and too greedy.

Now the retailer has announced a major rebranding exercise – with a multi-million advertising campaign which will aim to make the British public love it again.

Rosie Baker of Marketing Week said: “Tesco needs to shed the cold, corporate facade that has cloaked it and made people stop thinking it was on their side.

“The way Tesco talks to customers on every level has to change. It must stop acting like the corporate behemoth it is and start giving consumers reasons to engage with the brand again.”

This week the supermarket, with an advertising budget of £140m a year, has hired agency Wieden + Kennedy (W+K) – a high-powered Mad Men-style agency which looks after global brands such as Nike, Coca Cola and Honda.

The advertising company’s brief is to “return the supermarket to a brand that people love.”

Tesco’s market share slipped to 29.7 per cent this year from 30.30 per cent in 2011 – and analysts say the image problem suffered by the supermarket is a big part of the problem.

Although the details of the campaign are still to be thrashed out, it could mean an end to the slogan: “Every little helps.” The agency may also move away from the celebrity voiceovers which have been a characteristic of Tesco advertising.

W+K head of interaction Graham Douglas said: “We want to cement Tesco’s place in UK culture, the hearts of British people and push it to be a brand that people love.”

Matt Atkinson, Tesco Group marketing and digital officer said, “We are delighted to have appointed W+K after a very competitive pitch process. Their strong thinking, brilliant team work and creativity really stood out. We are excited about working with them on our plans. I would say that it was very hard to make a decision, the responses we had from all were very compelling indeed”

Neil Christie, managing director of W+K, said, “We are absolutely thrilled and delighted to be working with Tesco. It’s a wonderful opportunity to work with one of Britain’s truly iconic brands”.

Analysts said Tesco was in trouble after sales fell in three consecutive quarters. The store also suffered its worst Christmas trading for two decades – with its Price Drop promotion nicknamed Price Flop.

Robert Clark, an independent retail analyst, said: “Tesco has been underperforming for two or three years domestically.

“The Price Drop campaign didn’t cut the mustard and failed to address what competition was doing – nibbling away at segments of its market share.”

A spokesman for the supermarket said the selection of the new advertising agency was part of a six-point plan for revitalising Tesco stores. The company is also planning a multimillion pound investment in improving its stores.

Clive Black of Shore Capital said he believed the supermarket could restore its public image: “If it lets the product and categories speak for itself and does that with effective price promotion and marketing, that love affair will start again.”