Jo Causon of the Institute of Customer Service provides advice for Tesco chief executive Philip Clarke as he announces a multi-million pound turnaround plan.
Tesco is expected to report the first decline in annual profits in its UK business in over 20 years today, and group chief executive Philip Clarke is expected to accompany this announcement with the unveiling of a multi-million pound turnaround plan to revitalise the retailing giant's performance.
But the retailing giant has been warned by The Institute of Customer Service that if it is to turn around its fortunes it will have to shift focus away from value to factors influencing the wider customer experience, with CEO Jo Causon emphasising that "Clarke must focus on what people need."
Rumours suggest that Tesco will post a 2% fall in UK trading profits to £2.47bn for the year ending 25 February - certainly not small beans, but enough to spur its chief executive into action. And at the weekend, Broker JP Morgan Cazenove reported that Clarke will announce that he is putting plans for new superstores on hold for the next three years and will unveil a £800m two-year commitment to staff recruitment and store revamps.
This follows Clarke's recent announcement that Tesco had already boosted staff numbers in 200 stores to improve customer service.
So will this slowdown of store expansions and increased focus on customer interaction be the blueprint to address growing customer and shareholder discontent?
Causon has been calling on the large retailers to respond to the current climate by shifting emphasis onto service for some time. At the end of last year, she told MyCustomer.com: “We’ve cut all the costs out. The only way to differentiate yourself in the marketplace is through service and experience. And there are a growing number of organisations that understand that. If you look at high performers they consistently invest time, energy and money in the customer experience. In our UKCSI research, there was a percentage that realise that going forward they would have to significantly invest in customer service in order to differentiate themselves – but at the same time there was still a number that admitted they had cut those areas.”
As such, Causon is unsurprised by news of Tesco’s turnaround plan: “The UK retail sector is highly competitive and while many consumers continue to feel the pinch, value for money remains a key footfall driver. But it is not just low prices motivating consumers, as the recent successes of Waitrose and John Lewis over the Easter period demonstrate. The whole customer experience influences loyalty and patronage.
“When market share falls, or companies identify that they have gone adrift of their value proposition, it is imperative to reconnect with customers. Efforts have already been made by Tesco to move away from a purely price lead proposition with the rebranding of its value line.”
But Causon also has other recommendations for Tesco to take on board:
- Ensure Tesco is leveraging customer feedback to drive operational improvements - “Mr Clarke must continue to ensure that Tesco listens to and truly takes on board feedback received by shoppers at every touchpoint… Complaints, whether online or offline, must be viewed as an opportunity to improve, and these need to be responded to and dealt with proactively at both operational and board level.”
- Examine the customer journey to improve the customer experience: “He must also evaluate the customer journey to identify what is important to real Tesco shoppers: from the layout of the store, to product choice and interactions with staff who are well trained, responsive and engaged.”
- Ensure consistency across multiple channels - “Service delivery must be consistent across all touchpoints. A focus on Tesco’s online services is welcomed, but this must not be at the expense of its other services.”