In recent weeks Tesco has been playing copycat with Asda over the latter’s price guarantee, with what you might politely call ‘mixed’ results.
As well as being an avoidable PR own goal, Double the Difference also exposed Tesco to criticism that it has become uncharacteristically reactive of late.
There were further echoes of its bitterest rival today when analysts suggested Tesco had erred by going too far downmarket – especially in non-food, responsible for much of this term's slowdown.
And the parallels grew more abundant still as boss Philip Clarke dropped a few hints about an own-label tweak. That’s something Asda went big on last year, while Sainsbury’s is currently a third of the way through its own own-label overhaul.
The verdict on today’s performance from Philip Clarke is that he was commendably honest (just like his namesake at Asda not so long ago).
He declined to hide behind the stock responses about ‘challenging trading conditions’ almost every CEO has wheeled out at some point in the past year or so.
“We didn't achieve our planned growth and this was only partly attributable to the deterioration in the consumer environment,” he said. “We can do better and we are taking action in key areas; for example, to drive a faster rate of product innovation and to improve the sharpness of our communication to customers.”
Of course, the new UK board was put together specifically to address some of the failings highlighted by today’s performance.
We’ll be taking a close look at what other innovations might be in store in next week’s edition of The Grocer. (Shore Capital analyst Clive Black offered his thoughts in a Second Opinion a few weeks back.)
In the short term, we can expect Tesco Bank to be offering mortgages by the autumn. Further down the line, Tesco wants to be online in every market where it has stores.
Despite the record profits (buoyed by £427m of property disposals), the results will do little to quiet those who suggest Clarke – flanked by finance chief Laurie McIlwee as he faced the press this morning – was thrown something of a hospital pass when he took the top job.
If he didn’t already, Clarke now knows how heavy weighs the crown.
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