Tuesday, 13 October 2015

How is Tesco turning itself around?

After stories of profit warnings, falling stock prices and decreased market share, it's clear that Britain's biggest supermarket is in trouble. But Tesco has a new CEO and is trying to turn its fortunes around by making some changes.

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Most recently, Tesco has announced it's going to sell off its operations in South Korea. Like the ill-fated Fresh & Easy in the US and its Japanese efforts, these have been unsuccessful. In Tokyo, nearly half of Tesco stores didn't make a profit, and its Japanese market share was never above one per cent.

We think this is a good example of recognising your strengths and playing to those. Not everything you experiment with will be a success, and it's important to realise when you've started to throw good money after bad. The same lesson can be applied to any of your business processes if you analyse them correctly.

The other recent step is replacing vouchers for its Price Promise scheme with a direct price reduction at the till. At the moment, you get a paper voucher if your shop would've been cheaper at ASDA, Sainsbury's or Morrisons. This encourages you to come back to get the discount, and keep shopping in the same place. But our lives are already filled with bits of paper and they're easy to forget or lose. By automatically applying any discount, Tesco is taking the admin out of the process and streamlining it - another great lesson for your own business processes.

Our consultant, Artur Oganov, said, 'This is a good change. Anything that makes the process quicker is useful. And I think it will work for Tesco. People will always go there now, knowing they get the best deal right away.'