Thursday 4 October 2012

What next for the Tesco NAM?

Given yesterday’s long-heralded results, it might have occurred to Tesco NAMs that their best option might be a discrete pitch for the JS account management role. Better, however, to try to place Tesco’s results in perspective before making irreversible moves.

Essentially, for the past ten years Tesco have been going-for-broke in trying to achieve global presence, at an obvious cost to their UK business. The City have never really looked beyond the UK scene in assessing their potential, seeing overseas initiatives as high risk and costly.

Basis of global retailing
In the process, Tesco lost sight of one of the basic principles of successful global retailing – maintain profitable dominance of the home market. Otherwise, domestic issues arising from a major share and the resulting pressure on special interest groups become over-distracting in terms of pursuing global presence.

Putting Tesco in today's context
We have to remember the following:
  1. The world is currently undergoing one of the most fundamental changes and unprecedented upheavals ever experienced, affecting the fundamentals of capitalism, let alone buying and selling…everywhere
  2. The embryo savvy consumer has morphed into a mature adult determined to settle for nothing less than demonstrable value for money, in most places
  3. The younger generation have bypassed ‘na├»ve’ mode and are coming ready-equipped with the views and technology of mature-savvy, with no baggage (think how few are watching TV or partaking of ‘mainstream’ anything…)
  4. January’s profit warning has forced Tesco to re-balance its business model, re-focusing on UK performance
  5. So, it has cost £1bn, and hit the bottom line, big deal…(Have you been into your local newly-focused Tesco lately, where even a little has helped…)
  6. They still have 30% share of the market, almost double the net margin of JS and the scale to make a difference to savvy shoppers...the ones who count...
  7. Rest-of-world business has always represented issues for Tesco, and in the current global climate, they are coping better than most (seen Carrefour's results lately?)
  8. The US is proving to be a slow burn, and draining global profits at £78m per annum, a small price to pay to establish their presence in one of the world’s most challenging markets. Tesco still represents ‘small & fresh’ in a market that tends to be ‘big & stale’, and needs to scale back, cut costs and achieve break-even, knowing that if they pull out now, no future CEO will ever stick her neck out and try again….
  9. Tesco have managed (by luck or judgement, who cares?) to avoid the big Euro-countries that are participating in a slow train-crash, with unimaginable consequences...(forget MSM, read the blogs)
  10. Meanwhile their CEE, and Asian businesses are ready to capitalise on any whisper of an upturn…and the UK abounds with opportunities for NAMs to help Tesco innovate, like never before...
In other words, no need to dust down the CV yet… 

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