Why tesco’s dominance might just prove its downfall
Sir Terry Leahy is a man of few words but he may come to rue his comments this week that Tesco is through the period of greatest risk, during which Wal-Mart entered the UK and the sector endured two inquiries.
True, the Tesco machine is running more smoothly than ever and its record £1.7bn profit certainly proves the great British public can’t get enough of it. Everything it touches turns to gold, thanks to its uncompromising strategy of putting the customer first.
We should unite in celebrating this British company that is such an outstanding global success.
And yet…this very success could be its Achilles heel. It’s a delicate job managing the message that you are completely dominant, not only in your core sector but potentially in clothing, household, beauty, online and convenience. The boast of taking £1 in every £8 spent by the public makes for great headlines but for some in society it is uncomfortable reading.
Tesco, and indeed all the major multiples, may be in for a bumpy ride going forward. At the FWD conference this week all agreed the time was right to take on the big boys. Jim Dowd MP spoke of the “Tesco Leviathan”. No one wants to deny consumers the best choice but it’s not about hammering Tesco, it’s about its disproportionate power, he said. PR mastermind Alan Twigg added that people were becoming scared of “the big, global thing” and retreating to their local comfort zone.
London Metropolitan University lecturer Jeremy Baker put it even more strongly. “A lot of people are fearful,” he said. The big four will form a cartel that will be hated by a public no longer feeling in charge. He urged independents to harness their many allies by going “all out for the negative side”.
But do the big four really have to worry? After all, if consumers hate them why do they keep delivering huge profits? Another set of results this week may point to the answer. Unveiling record profits, Co-operative Group chief executive Martin Beaumont said the co-operative society was back in fashion. “Our time is very much of the moment,” he said. And new research from HIM shows a slow but steady revival in the use of specialist food stores. Consumer backlashes start small but, like viral marketing and computer viruses, they quickly build to a damaging crescendo.
Sir Terry Leahy is a man of few words but he may come to rue his comments this week that Tesco is through the period of greatest risk, during which Wal-Mart entered the UK and the sector endured two inquiries.
True, the Tesco machine is running more smoothly than ever and its record £1.7bn profit certainly proves the great British public can’t get enough of it. Everything it touches turns to gold, thanks to its uncompromising strategy of putting the customer first.
We should unite in celebrating this British company that is such an outstanding global success.
And yet…this very success could be its Achilles heel. It’s a delicate job managing the message that you are completely dominant, not only in your core sector but potentially in clothing, household, beauty, online and convenience. The boast of taking £1 in every £8 spent by the public makes for great headlines but for some in society it is uncomfortable reading.
Tesco, and indeed all the major multiples, may be in for a bumpy ride going forward. At the FWD conference this week all agreed the time was right to take on the big boys. Jim Dowd MP spoke of the “Tesco Leviathan”. No one wants to deny consumers the best choice but it’s not about hammering Tesco, it’s about its disproportionate power, he said. PR mastermind Alan Twigg added that people were becoming scared of “the big, global thing” and retreating to their local comfort zone.
London Metropolitan University lecturer Jeremy Baker put it even more strongly. “A lot of people are fearful,” he said. The big four will form a cartel that will be hated by a public no longer feeling in charge. He urged independents to harness their many allies by going “all out for the negative side”.
But do the big four really have to worry? After all, if consumers hate them why do they keep delivering huge profits? Another set of results this week may point to the answer. Unveiling record profits, Co-operative Group chief executive Martin Beaumont said the co-operative society was back in fashion. “Our time is very much of the moment,” he said. And new research from HIM shows a slow but steady revival in the use of specialist food stores. Consumer backlashes start small but, like viral marketing and computer viruses, they quickly build to a damaging crescendo.
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