Three Things We Can We Learn From Tesco

What can we learn from Tesco?

As my recent blog about the Apple store hopefully showed, you can learn valuable lessons from companies that aren’t in your market. Plus, whether you’re a huge corporate or an SME, if you take your eye off the ball, you could be paying for it for a long time to come.

Here are my three key takeaways from Tesco’s recent issues:

1. Focus

While it’s natural for a business like Tesco to want to expand its business internationally, after leading the UK market for some years, it seemingly ignored this core market to focus on the U.S and Asia. Not only did UK customers feel a little abandoned, but crucially, it left Tesco vulnerable to proactive competitors in the UK who exploited a chink in Tesco’s armour, before it even realised it was there.

My advice is (and I repeat this point a lot!) always put the customer first. Sounds obvious, right? But it’s easy to let this slip and become too focused on business goals and satisfying shareholders. Sure, those are important, but keep your customers happy and coming back for more, and those things will fall into place.

2. Differentiate

Who exactly are your target customers? No business can be all things to all people; a lesson Tesco is currently learning the hard way. Segmenting your audience, by geography, demographic, or any number of other dimensions helps here, particularly for large businesses, or those that work across several vertical sectors. Work out your customer pain points in each segment, and how you solve them.

Next, evaluate why your customer groups should choose you over your competitors? What makes you different? Remember, you’re likely to have different customer pain points and competitors in each target segment.

Tesco’s core message is centred around cost, but with the likes of Aldi and Lidl tearing up that ground, it no longer stands up for Tesco. Meanwhile, Waitrose and M&S Food have the quality/high-end spectrum covered. So where does Tesco go from here?

Without a clear strategy to differentiate itself in a hugely competitive market, customers don’t have a clear reason to buy from it, and that spells a rocky road.

3. Re-Evaluate

Even if things are going well (and hopefully they are!), having another look at your strategy every few months should be on your to-do list; and that goes for business, marketing and sales strategies, since they should be integrated. Again, check what’s happening in the market from your customers’ perspective, and what you competitors are up to. Have any new competitors emerged?

Subtle market changes can have a significant long-term impact. In Tesco’s case, it ploughed on with its strategy to build large out-of-town stores, without recognising that a behavioural shift was taking place amongst its consumers, namely a move in many areas towards more local, independent outlets. The result? – the traditional big weekly shop began to wane. If you’re not aware of something, you can’t mediate against it. And you certainly shouldn’t ignore vital signs like this if you do spot them!

If you were Tesco’s Chief Executive, Dave Lewis, how would you turn around it's fortunes?