Friday, 25 July 2014

Tesco tantrums

Phil Clarke was an excellent CEO, continuing on from yesterday's theme which gerenated a lot of interest here is why:

- Clarke did not see Lidl or Aldi as the competition on the highstreet. The competition is Amazon and Ocado and Google.

- Tesco was investing lots of money in a digital strategy to develop a better at home expereince and try to own the customers of the future - by offering banking services but also home delivery and even a successful tablet. The tablet will be back to fight Kindle.

- At the same time Tesco had to sell out of its disastrous US adventure which has meant reduced returns.

- The overall debate yesterday about out of town dying is not really held up by recession figures of store closures - there are far more on the high street still. Bluewater, Stratford and Westfield dominate the retail market in the South of England - together with Oxford Street for the tourists.

- Clarke paid the price of being too visionary, as often happens with a CEO, particularly when the finances were in poor shape and with their domestic share so great it was only ever going to go down.

No doubt they will sell their land bank and try to reduce prices further, but the new CEO would be mad to stop the digital drive as that is focused on the next ten years rather than the next two.


MyDismissiveName said...

Sorry to go for the jugular CU but all this talk of 'digital drives' and 'eStrategies' always comes from people who havent a clue about the subject at hand.

Your fifth paragraph ("The overall debate...") doesnt make any sense as is - any chance you could edit it to make the point clearer?

What you are looking at here is a fairly full-on deflation. The govt wouldnt allow house prices to fall so the squeezed under-40s have to cut back somewhere to afford a roof over their heads. And so Tesco dies by a thousand price cuts.
The future (within 10 years) is fully automated shopping except for a few last minute odds and sods - pint of milk and the like.
You do not need an Enormo-mart on the edge of town for that.
Your full shopping will be delivered from an Ocado style warehouse by autonomous vehicle (AV) which will arrive exactly when it said it would.
This will happen within 10 years; or as soon as AVs are permitted by law.
(These vehicles incidentally will be very small, not truck sized things. More like mobile postboxes)

I have said that land prices need to fall and need to be taxed too.
Seems like the wonderous powers of the market are agreeing with me.
Hopefully the one out-of-kilter economic pillar (land labour capital enterprise) will soon be taxed and the Labour element will be relieved entirely of its tax burden. (No taxes for those earning under £30k, nominal taxes up to £75k, above that normal levels 45% say)

We are deflating fairly rapidly, Cu. This Tesco malarky is just a symptom, not the problem.

Until house/land prices fall substantially the economy (and its erstwhile juggernauts) will continue to stagger and stumble.
Carney is aware of this and is panicking about the defaults coming when rates rise.

And please no more iStories, web-e-visions or other marketing bullshit ;)

BrianSJ said...

My limited use of Tesco web purchasing will stay limited because it is pretty unusable.

dearieme said...

Deliveries are fine for bog rolls and tins of beans, fizzy water and wine. Only a loony would let some mobile pimple at Tesco pick his fruit and veg, or even his bacon and fish.

Bill Quango MP said...

- Clarke did not see Lidl or Aldi as the competition on the highstreet.
He should have - along with ..
The competition that is Amazon and Ocado and Google.

Blue Eyes said...

I have been pleased with my Sainsbury's deliveries but every now and again am tempted to try Tesco instead. I get about three minutes into the website and give up.

Timbo614 said...

As a shareholder in these erstwhile dinosaurs, personally, Mr & Mrs Timbo do not order food on-line. It would remove Mrs Timbo's fun at finding the value for money real bargains on good brand names.

We may be unusual but at times we might have 6 months supply, or longer, of some things. The missus waits for the desperately silly offer designed to shift overbuying or whatever reason they have and then pounces :)

I always know what's on silly-offer and how good a buy it was by how many we have of them. I remember in particular 40 tins of sweetcorn, 100 loo rolls and 10Kg of rice! There are normally 20 odd jars of instant coffee and currently in *my* cupboard 8 bottles of brandy :) :)

I am very sure that the death of the hunter gatherer instinct is still some way off.

CityUnslicker said...

umm...mydismissivename. you seem to agree that Clarke was right to focus on digital delivery and ignore the big shops as a ten year strategy!

MyLateNightName said...

@cu - Well...yes, I suppose I do.
(I was just being sarky earlier)

The problem is that people are misunderstanding the reach and extent of technology and by that I mean severely underestimating it.

Forget all this surfing the web for groceries, clicking on pictures and adding a credit card number thats last year.

The 'internet of things' - connected devices - will allow you to scan an item directly to your shopping list, for example. As you dispose of one tin of beans you'll be asked if you want to replace it.
Smart shelving will enable your house to deduce what you have removed from the kitchen cupboards and just how much Mixed Herbs you are using in your Stew.
Energy monitors will be able to deduce your calorific intake and your insurance company will buy that data to adjust your premiums.
Finally an ambulance will call to your house 15 minutes before you have your first heart attack.

Thats the traditional and fairly inevitable scenario. But imagine a smart business built to harvest this data and put your shopping out to a bid?
Your house would say 'Can I get a bid for a jar of Maxwell House/Kilo of carrots/packet of nappies.' In this scenario you would always get the lowest price on every item. The customer would indeed be king.
If, the AVs alluded to in my earlier post were PERSONALLY owned - ie NOT owned by the grocery supplier - you could send your little machine off to do the shopping and pick up every single instance of the cheapest item you require.
This, I think, is a lot closer to happening than many people think.
An aging population will give it a further boost.

In business terms this is hugely deflationary for middle-men such as Tesco and indeed for suppliers and ancillary services.

So Clarke was indeed right but trying to predict the future successfully is difficult, trying to implement it is often suicidal.

Blue Eyes said...

I am looking forward to a drone dropping things off to me wherever I am. In the park, quite fancy an impromtu picnic, click click whirr and there it is!

In Philip K Dick's story an automated system brought people everythig they needed, but the people got frustrated and wanted to grow/make things themselves. I think he misunderstood human nature!

andrew said... a time will come when my oven will say
'i am sorry dave, i cannot let you cook another pizza today, some salad will be delivered in 20m'

Watched Over by Machines of Loving Grace

Anonymous said...

"If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it."

They say we are only 2 days away from starvation - which considering how much we as a nation rely on Tesco's logistics infrastructure, then perhaps instead of taxing Tesco, we should give them a healthy bung to improve their profits.

RBS could be used as a justification for subsidy for the public good.

/sarcasm off

john in cheshire said...

I've been having my groceries, and wine, delivered for several years and think it's a great service. I have used all 4 major supermarket delivery services (asda, tesco, sainsbury's and ocado/waitrose). There are minor niggles with them, substitute goods being one but for me the advantages outweigh the minor irritations.
One suggestion for everyone : try the website It's price comparison and is sufficiently useful that I order my goods through it. Surprisingly, asda isn't always the cheapest and recently it's been tesco. The tesco petrol deal is also an attraction for me.

BrianSJ said...

Completely off topic, but of known interest to some of you
Someone has finally done (or re-invented) something about cooking pot efficiency.

Nick Drew said...

Brian - yes, the potential for serious energy efficiency is still staggering

much more deserving of government R&D stimuli than - well, any number of nonsensical schemes we could all mention

CCS particularly gets my goat

MyToldYouSoName said...

As if by magic......