OPINION: MILLS ON ... TESCO AND SAINSBURY’S

One wouldn’t expect Terry Leahy, chief executive of Tesco, which last week produced yet another sparkling set of trading figures, to be too expansive in explaining why he holds such a commanding lead over Sainsbury’s, which last week produced yet another set of poor figures.

One wouldn’t expect Terry Leahy, chief executive of Tesco, which

last week produced yet another sparkling set of trading figures, to be

too expansive in explaining why he holds such a commanding lead over

Sainsbury’s, which last week produced yet another set of poor

figures.



But he has offered a couple of clues. The first is that Tesco really

began its process of change when his predecessor, Lord McLaurin,

announced that they should stop thinking about Sainsbury’s, then number

one in the market, and get on with doing their own thing. And how right

he was.



The second clue came last week, when Leahy alluded to the role of its

advertising, and in particular the ’every little helps’ campaign by Lowe

Howard-Spink. Now, nobody should conclude that the difference between

the two groups can be put down to the fact that Tesco’s advertising is

good (although not the too-twee Prunella Scales and Jane Horrocks

series) and that of Sainsbury’s has been less than it might.



Rather, the significance of Tesco’s advertising is in the way that it

has become the outward manifestation of the company’s own internal

culture.



This, let us be clear, is all about putting the customer first - whether

by cutting queues and opening more tills, providing bag packers, or

making the checkout area a sweet-free zone. Of course, Tesco did all the

big things right - it improved its range of products, cut prices and

introduced a loyalty card - but the secret was that it demonstrated in

the only place that matters - the stores - that it cared, in as many

ways as possible.



In short, it lived up to its advertising claim. Outside of Tesco, Lowes

has never really been given the credit it deserves for the part it

played in connecting the advertising to the company culture.



By contrast, the reality of Sainsbury’s was that, although its ads

banged on about ’good food costing less’, it was really more interested

in its trading margins than its customers. Much of the blame for this

must lie with the Sainsbury’s management culture. But perhaps we

shouldn’t be too surprised: before the present incumbent, Kevin

McCarten, Sainsbury’s marketing directors didn’t actually have marketing

backgrounds.



Reading the press coverage last week, one might guess that all

Sainsbury’s has to do to recover its position is to drop John Cleese and

find a decent ad campaign. If only it was that easy. However effectively

it talks the talk of putting customers first, it also has to walk the

walk - and that involves a culture change, at the top. Still, the fact

that M&C Saatchi’s entry to the TV account has been through an internal

project suggests that Sainsbury’s has at last realised where the real

problem lies.



The sting in this particular tail, however, may come from a hitherto

unexpected source: the Asda/Kingfisher combination, a new retailing

force more akin to Wal-Mart and Carrefour, that could revolutionise the

UK market.



Needless to say, both Asda and Kingfisher are much more like Tesco than

Sainsbury’s in the way they practise ’customer first’ management.



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