I was reading an article by Robert Peston this morning following Tesco's results announcement. In it he questions whether their poor relatively performance is a blip or something more fundamental.
He comments:
"The big question is whether Tesco's British problems are mainly the result of pricing errors made in the past few months by the new chief executive, Philip Clarke, who took over from Sir Terry Leahy in March, or whether they represent structural flaws that Mr Clarke inherited.
To put it more crudely, is this Mr Clarke's mess or one bequeathed to him by his predecessor, who ran the company for 15 years and turned Tesco into the global giant that it is today?
And, if the problems are structural, how easily can they be sorted?"
The fall in the share price would seem to suggest that the market seems to think it could be the latter.
If that's true, what's causing it? I know of an unofficial Tesco staff website so I decided I'd have a quick look and see if it provided any clues. Here's some of the comments I found (all posted during the last six months:
"...in my experience, around 99% of tesco staff are unhappy with tesco. they pay well though and that is the only reason they do their jobs and i cant say i blame them but that does not excuse poor service. as a customer i cant really fault any of the shop staff that i have come across although there are a few grumpy ones on the back door of the odd shop. i personally do not put it down to individual shops or even regional management. tesco as a company are obsessed with image and cost cutting and it is the staff and customers who are suffering as a result of these ill thought out ideas and company policies."
"It's down to training and staff self esteem. If staff are so demotivated that they don't care how they act, in front of customers, then something is wrong. Tesco, as a company, has gradually lost the ability to identify with the customer and customer dissatisfaction is growing. The emphasis put on one in front and till speed has outweighed service. While I appreciate that some customers can be difficult and even rude, there's no reason for bad manners from staff."
"I'm a (long-time) ex-employee of Tesco and I'm seeing the same thing in stores all over the country. I travel a lot as part of my work, and every single store I go in these days has problems with customer service. I've actually come to expect distant, uninterested and visibly stressed out staff at Tesco - it's really not a lie to say I can't remember the last time I had good service in one of the stores.A few weeks ago I went into Sheffield - Infirmary Rd store (my nearest), got round with a basket of purchases and found that more than half of the checkouts were unmanned with queues an absolute mile long. The staff who were managing the checkouts were trying to herd everybody into one big queue - which was stretching along the front and half way down the wines and spirits aisle. But people coming from the other side didn't realise this and were joining single queues. It was a total disaster and I was hearing call after call going out for the management team to get to the checkouts and nobody came. There was no way on God's earth I was standing in those queues so I went to the service desk - it was mobbed with angry customers - and gave them my basket.I was advised by the staff there to submit feedback on the comments website, as this issue had been caused by budget cutting and the staff in store were as angry about it as the customers were (didn't quite explain why so many replenishment staff weren't being moved to checkouts though). I felt very sorry for the people having to take the flack over it and I did submit my comments. Roughly five weeks later, still no reply. Is this really how badly wrong Tesco is getting things these days? If it is, how long is it going to be before sales start to suffer spectacularly?"
"Sounds about right, its ok Tesco wanting more from their staff but there comes a point where you can only cut so many hours before the quality of service suffers. You see this in most stores!It is highly annoying as a shell filler to be pulled from the job you are supposed to be doing to go and support checkouts, which to be fair, should have a full bank during busy periods anyway! It’s not unheard of in our store for shelf fillers to spend half their shift covering tills and it’s just compromising availability and the presentation on the shop floor. Then this member of staff often gets complained at by management for not completing the tasks they were given on their department.This isn’t the customers fault, but unfortunately when you have a demoralised and unhappy member of staff then service is going to suffer."
"i informed customer service that customers are being overcharged at the self service 6 months ago and they still haven't fixed the issue eg: price on the shelf £1.40 ...at self service £1.89!"
The reasons why certainly start to become clear when you read comments like these. In a cost cutting environment, having employees fully engaged becomes even more important. Without that , the customer experience suffers. My own experience of Tesco's service is that it is now mediocre at best and I no longer find myself driving an extra few miles to seek out one of their stores. And the sales results speak for themselves!
I wonder a) if they'll be able to turn it around and b) how many other organisations are storing up exactly the same problem as a result of decisions they've made in recent months.
By the way, if you want to have a look at the comments, you can find the website I mentioned at http://www.verylittlehelps.com/index.php?topic=10513.0
Footnote: Robert Peston updated his article following an interview with Tesco CEO Philip Clarke. Mr Clarke indicated that:
"However he concedes there was a more fundamental weakness, which is that the group under-invested in the UK stores over the past few years, as it concentrated its expansion on Asia, Eastern Europe, the US, banking and the internet.
In the years since the 2008/9 recession, the UK managed to generate maximum profits rather than maximum sales, he implies. And in his view this means there were and are too few employees in stores. So, for example, checkout queues can be too long and shelves may not be as well stocked as they should be. He is planning to remedy all this. In the next year and a bit, there will be a big investment in what he describes as the "experience" for British shoppers, with thousands more people hired (Tesco already employs 300,000 in the UK and half a million around the world) and store layouts changed."
The number of employees in stores obviously came out in the comments above. I guess it would be surprising for him to admit there's an engagement problem but I suspect that employees would have appreciated an acknowledgement of that from him.....
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