So news that the UK’s biggest supermarket was planning a major reset of its entire food and packaged goods range, all to be delivered in the space of less than a year, will not have gone down well.
Tesco set out the proposals at last week’s gathering of hundreds of suppliers at an IGD trade briefing, under the new banner Fit for Growth.
It might not roll off the tongue quite as well as Project Reset – the controversial but ultimately hugely successful range cull overseen by former CEO Dave Lewis – but Tesco has told suppliers it expects to achieve “transformational change” with a “macro level” review some believe could be just as big as ‘Drastic’ Dave’s.
But just how drastic is this latest move? On one hand, it shows Tesco is keenly aware it cannot afford to sit still now the pandemic is over. It clearly recognises the impact the cost of living crisis is having on big weekly shops and sees that the discounters are still out to eat its lunch, just as they were successfully doing before Covid ironically gave the supermarkets a temporary respite.
So suppliers should welcome moves by Tesco to look at where it can make its stores work harder and have a fresh look at what needs to change now life has returned to normal… albeit a normality dominated by food inflation and the cost of living crisis.
How can it beef up its underperforming meat and fresh aisles? Does it need to decrease the space it is dedicating to vegan or increase it for world foods? How can it improve the shopping experience in the areas that have replaced its closed down counters? These are just some of the questions Tesco is asking. To say nothing of assessing the impact of HFSS
But it has told suppliers it also wants to achieve a new pricing policy across all tiers – no small challenge given the highest inflation in 45 years. It also wants to remove duplication across its entire food range and improve the effectiveness of its promotions, despite the success of its Clubcard Prices campaign.
And for all of this, Tesco and its suppliers have a mere 11 months.
Let us not forget, Lewis’s reset, launched in 2015, involved a whole series of annual stages, which effectively only ended when the pandemic struck, to achieve the change Tesco had wanted.
Yet Tesco says that while most of its new reset will come in the new year, work will begin before the summer is out.
As Ged Futter, founder of The Retail Mind, puts it: “How on earth Tesco expects to achieve transformational change in that timeframe I just don’t know.
“Either it’s been planning this for the past 18 months without its category captains liaising with suppliers, or it’s not been planning it, and either way it’s not going to achieve the transformational change they say they want, or perhaps they realise that it’s not achievable.”
So why would Tesco want to set such ambitious goals if it is not serious?
Cynics among the suppliers at the IGD event believe the answer could lie in that other ongoing review, of Tesco’s supplier charges, which caused outrage in April when a letter from chief policy officer Ashwin Prasad landed in inboxes, warning suppliers that unless they took part they could face range reviews and delists.
Tesco has since backtracked furiously on that threat, at least in public – though multiple retailers tell The Grocer the message does not seem to have got through to all of its buyers.
Prasad himself told the IGD event several times that fulfilment fees were “optional”.
But with Tesco clearly having targeted a “transformational” financial change in its end of year figures, either from fulfilment fees or from this new reset, it’s easy to see why suppliers may have conflated the two issues.
Recent history of range resets suggests those with financial targets at their heart do not tend to be the ones that succeed, whereas those in tune with the latest customer trends and pricing demands are the winners.
Tesco stressed at last week’s event that it wants to work with suppliers on this latest reset to achieve “transformational end-to-end change” and greater simplicity in the supply chain. It also highlighted that the moves are being handled internally rather than being the work of external consultants and money men. All that bodes well.
But given the huge stakes, it will be fascinating to see how this plays out, and whether the announcement at Tobacco Dock turns out to be more than the smoke and mirrors those cynics among its suppliers suspect.