Magazine article Marketing


Magazine article Marketing


Article excerpt

Tesco may find some inspiration to cope with troubled times from an unlikely source - Starbucks.

Underperforming stores, a value deal that didn't work, a tumbling share price and a new chief with a big task on his hands: it could be Tesco, 2012, but it applies equally to Starbucks, 2008.

Then, Howard Schultz was recalled to revive the ailing coffee-house brand, which, like Tesco today, had suffered a spectacular fall from grace as the defining offer of its sector. Customer traffic had declined for the first time, the share price had halved in a year, and the love-hate vernacular that had always typified critical comment became noticeably absent of love.

Four years on, the brand is thriving anew, sales growth is running at 10%, new markets are being pioneered and the share price has quadrupled.

What advice might Schultz offer to Philip Clarke, standing lonely at the helm of Tesco?

Well, one simple tenet might be that drastic situations do not necessarily call for drastic measures. What can make a problem seem suddenly so alarming is that it is crystallised in a single moment - in Tesco's case the announcement of a 2.3% sales fall - even though its causes might be undramatic and multifactorial.

Once the news hits and the noise starts, though, it is hard to resist the impulse to reach for big ideas and sweeping gestures. The danger then is that the good gets overturned with the bad.

Much more subtle, and much more difficult, is the art of probing for undramatic, multifactorial solutions. This was the approach Schultz used, reversing years of brand-drift errors, with a practical, seven-point plan. It led to important, but mostly unspectacular, improvements across the board.

Stores were quietly revamped. Out went the primary-colour pictures of Vespas, in came earthier tones and photographic images that lionised the people and the places behind the coffee. Without any grand pronouncements, a 'back to roots' message was conveyed where it matters most: at the point of everyday brand interaction.

Product and service were improved through a new internal training scheme. In the US, all stores were closed for half a day so baristas could learn to make better espresso. Value deals that had undermined quality perceptions - such as a dollars 1 coffee and a free refill - were phased out.

There were tougher decisions, too. Some 800 underperforming stores were axed. This is always a business call more than a brand issue, but the message it sends can nevertheless prompt a positive interpretation: the company will not trade where it cannot do it superbly well. …

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