Tuesday 7 April 2009

Tesco's City profile, an alternative view?

Weekend press reports would appear to indicate that some city analysts feel that Tesco is over-ranged, and over-focused on the bottom line, etc etc

We feel that this depends upon where you measure range.

Viewed at national level, Tesco's total repertoir would be vast. However, taking into account store-level assortment, at store level (where the consumer shops…) the assortment probably matches need. Where rate of sale indicates that this not the case, Tesco can re-arrange a store in a heartbeat.
Here Tesco have probably already reached a point on a journey upon which others are now being urged to travel (See Rule 4 'cluster your stores' in April edition Harvard Business Review, see also some good tips on focusing upon 'switchers')

Other mults could claim to do the same, but the difference is that Tesco can use Clubcard analysis to refine the selection better than most, and its internal efficiencies result in more margin dropping into the bottom line. They are not driven by margin, but because of their global rate of expansion, they need a good rate of ROCE (Margin x Capital rotation) to sustain the share price (i.e. reassure the City) , keep the cost of credit to a minimum, gain supplier support, maintain the respect of competitors, and build upon the loyalty of the consumer, at store level.

A great opportunity and a near-perfect match exists for those suppliers who realise that brand marketing is no longer about national coverage/saturation, but rather about being available in those parts of the country where the brand's consumer profile live and do their shopping, thus helping to get the brand closer to the newly savvy consumer, who is demanding personal attention, or else….(use our Buying Mix Analysis at consumer level to guage your pulling power vs.the competition)

We believe that Tesco can facilitate that process.

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