Investors would have you believe that Tesco is over. Finished. Yet why are their revenues still growing? A dead company to me is one that nobody likes, nobody has heard of or has seen sales retreat to next to nothing yet I don't believe Tesco qualifies for any of these.
Tesco have what i like to think of as "duck syndrome" they have been floating around in the mid price, mid luxury level so long they have left the higher price market to be snipped by John Lewis and the low price market to be taken by Aldi and Lidl. Tesco benefited well for years by consumers not really knowing what price they want but now it seems they most definitely do.
I feel that this could be a benefit for Tesco however. With a well established name from a likable country they can make a series of smart moves that will see them quickly beating the German opposition down just like Winston Churchill's men once did.
- Split up. I feel it is important that Tesco stops trying to focus all it's efforts on sitting in the medium price bracket. The name Tesco needs to be retired except for an overall "Tesco group" and from there the actual store needs to be split into three sections. One high priced targeting Waitrose and Marks and Spencer's directly, one middle priced. (No matter what I said this is still a very important market that Tesco can't loose hold of) and one lower priced targeted directly at Aldi and Lidl. Each super store needs to be split into three parts with the respective names of each store above, logistical movements would be the same but consumers would be able to get the feeling of what they want. Waitrose's offers the experience of consumers feeling they are getting a better product. Shoppers here don't want to be looking at "Tesco market price" products while buying their premium steaks and likewise people who want to buy 20 meatballs for £1 don't want to see that 8oZ's of steak from the premium range costs more then their house. This is not how people want to shop and Tesco need to realize this.
- Use the subsidiary's they own as rewards. Tesco mobile is never going to challenge Vodafone and the likes for a real piece of the market so why not use it as a way to get the big customers back? I'm not talking about 1 million clubcard points = £1.99 off your next phone bill I'm saying it should be a really good deal. "Do three shops of £100 a month and get your most expensive contract free". Having shopped with my mum I have noticed how hard it is to stick to £100 and even if consumers somehow manage to spend £300 bang on a month what have Tesco lost? £45 of phone revenue. This doesn't seem like a bad swap to me.
- (For Britain only) Play the patriotism card. Us Brit's are a terribly patriotic group of chaps and the idea of swapping our weekly shopping to a German supermarket is a somewhat unnerving experience from what I have heard from people who have swapped their shop. Why haven't Tesco picked up on this?
- Provide a service. The moto "every little helps" doesn't apply anymore. You walk in store to find workers who are underpayed, hate the company and really would rather not help you if they can get away with it. Tesco need to back their slogan from now on with friendly staff and even going the extra mile with services such as taking your bags to your car. How much would this hurt Tesco's? Not a lot yet it would mean a great deal to Mum's, pensioners and many groups of people alike. My Nan used to visit Tesco's over other stores because the workers knew her, by name and what she gets up to now the only words spoken are "that'll be £____ please"
- Act now. While they still have a few customers, while they still have the money before it's too late.
These are the actions I believe to make but until Tesco looks like it is going to do anything radical it's definitely time to sell rather then buy Tesco shares.
