Published on: April 14, 2008Plenty of coverage of Tesco in various publications over the weekend, no doubt prompted by the release of financial data by the company scheduled for midweek.
• The Sunday Times reports that Tesco is expected to rebut claims that its Fresh & Easy chain of stores in the US is substantially below its sales targets, and “quell fears” that the investment community has about the company’s short term prospects.
• The Sunday Telegraph reports that Tesco has written to the UK Competition Commission, which has proposed that greater oversight must be given to retailers’ relationships with suppliers, saying that such a move is unnecessary and will have “serious ramifications for consumers and the UK economy.” In the letter, Tesco wrote that the Competition Commission “risks freezing investment, limiting expansion and having a detrimental effect, not just on the grocery sector as a whole, but in the wider economy beyond its remit.”
• The San Diego Business Journal reports that there continues to be much debate among so-called “experts” about Fresh & Easy’s performance, with some people maintaining that its stores are way below projections, and others saying that it is too early to know how the chain will perform…especially because it is likely to make adjustments as openings continue.
• The Sunday Herald reports that there is speculation that Tesco will launch a number of price cuts in its home UK market, in essence escalating price wars in the face of a declining market share. The “need for action will be underlined on Tuesday when chief executive Sir Terry Leahy is due to confirm that total underlying sales growth dwindled to just 3% over the peak winter months,” the Herald writes.
“Sales of non-food items - about 25% of the total - are expected to have fared still worse. That compares with a 4.1% like-for-like increase achieved by Sainsbury's and a whopping 9% sales surge reported by a resurgent Morrisons over a similar period.
The Herald also notes, by the way, that Tesco CEO Sir Terry Leahy has plenty of financial motivation to make sure that Fresh & Easy meets certain predetermined sales and profitability goals – a reported bonus, in the form of stock in the company, worth close to the equivalent of $20 million (US).
• Meanwhile, the Times of London has a story that focuses not on Fresh & Easy or the company’s overall sales performance, but rather on the expansion of its sophisticated and highly effective customer tracking system:
“Tesco is to monitor and record the shopping habits of more than 60 million customers around the world in an unprecedented deal with the “Big Brother” company behind its Clubcard loyalty card scheme,” the Times writes. “The supermarket chain’s partnership with Dunnhumby, the market research specialist, is being rolled out to nine countries where Tesco operates, including Thailand, South Korea and China but not, as yet, the United States.”
The Times continues, “The new agreement is almost certain to spark yet more controversy over Tesco’s power … Dunnhumby, which is majority owned by Tesco, generates most of its revenue by selling on the data in an anonymous form to some of the world’s biggest companies, such as Coca-Cola and Unilever, to help them to devise marketing campaigns.”
• And, because sales and profits aren’t the only thing Tesco apparently is trying to push up, Tesco has been criticized in the UK for selling what is described as a “salacious…padded plunge bra” being marketed to seven-year-old girls. While critics say that the bra is inappropriate for girls of that age, Tesco has defended the product, saying that “it is a product designed for girls at that self-conscious age when they are just developing. It is designed to cover up, not flatter, and was developed after speaking to parents.”
One of the papers in the UK notes that it was just a couple of years ago that Tesco was forced to remove a pole dancing kit from its toy section – another event that caused it some public relations nightmare.
- KC's View:
- It is the Dunnhumby item that I find the most interesting, because it raises a question that I keep hearing during discussions of Tesco’s Fresh & Easy operation in the US.
Since one of Tesco’s greatest advantages has been its database marketing operation, people ask why the company has not attempted to use it in the US.
It is a very good question. And I have yet to hear a very good answer.