Tesco Archives - Retail Shopfitting Summit
Posts Tagged :

Tesco

Tesco brand strong, but UK retailers behind global rivals

The value growth of the UK’s top retail brands is falling behind the leading global retail brands, according to the 2019 BrandZ Top 75 Most Valuable UK Brands ranking announced today by WPP and Kantar.

While the UK retailers in the Top 75 grew their combined value by 4% over the last year, their performance is significantly lower than that of the retail brands in the BrandZ Global Top 100, which grew by 25%.

It also represents a slowdown compared with the UK retailers’ 2018 value growth of 11%.  

The retail sector dominates the UK Top 75 again this year, with 14 retail brands making the ranking: Tesco, Next, Asda, Sainsbury’s, Marks & Spencer, Morrisons, Ocado, Boots, Co-op, Very, Waitrose, John Lewis, WHSmith and littlewoods.com. Online-only players Ocado and Very grew the most – by 35% and 21% respectively.

Without them, the combined value of the UK’s top retail brands would have increased by just 2%.

Of the retailers in the Global Top 100, Amazon was the biggest hitter, increasing its value 52% to US$315.5 billion. 

Highlights: The 2019 BrandZ Top 75 Most Valuable UK Brands shows:

  • Tesco is the most valuable UK retail brand (no.7) worth $9.2 billion, followed by Next (no.22), Asda (no.23), Sainsbury’s (no.24) and Marks & Spencer (no.27).
  • Ocado (no.34) grew its value fourth fastest of all the brands in the UK Top 75, rising 35% to $2.0bn.
  • The total value of the brands in the UK Top 75 (in all sectors) fell by 3% over the last year.
  • Outside retail, the other brands in 2019’s top 5 fastest risers are Deliveroo, (+54%; no.50; $1.4bn), Costa Coffee (+48%; no.47; $1.5bn), BrewDog (+40%; no.57; $1.2bn) and Innocent (+35%; no.51; $1.3bn).
  • Among three newcomers to the Top 75 this year, WHSmith enters at no.68. Aston Martin (no.69) and Halifax (no.70) are the other two.

The BrandZ Top 10 most valuable UK retail brands 2019

Rank 2019BrandBrand value 2019 (US$bn)Brand value changeRank 2018
7Tesco$9.2+1%7
22Next$2.8+4%25
23Asda$2.8+8%28
24Sainsbury’s$2.8+4%26
27Marks & Spencer$2.5-18%22
33Morrisons$2.1+6%36
34Ocado$2.0+35%49
40Boots$1.7-7%39
45Co-Op$1.5+2%48
52Very$1.3+21%58

Note: BrandZ is the only brand valuation ranking that combines validated financial data with consumers’ opinions to calculate the value a brand contributes to the business that owns it.

UK retailers are facing a raft of pressures, many driven by the changing needs of consumers who have high expectations when it comes to convenience, range, speed of delivery and competitive pricing. As a consequence, a record number (net 2,481) of well-known names disappeared from the UK’s top 500 high streets in 2018, including Maplin, Toys R Us and Poundworld.

Other retailers, in particular fashion brands, are moving from high street sites to new shopping areas such as train stations, airports and malls that attract high footfall and charge lower rents and rates.  

Some of the UK’s retail brands live off their fame, but are no longer distinctive or relevant to today’s consumer, according to Henry Heywood, Head of Brand at Kantar:

“The mantra here is that you cannot live off fame alone. Salience has kept brands buoyant, but without meaningful difference this is not sustainable; salience will drain away, along with value. To avoid losing more ground, retailers must reinvigorate themselves – invest in long-term brand building, by communicating to a less engaged, less loyal and more demanding consumer about why they are still relevant.”

BrandZ’s analysis also reveals the success of Irish brand Primark – not in the UK ranking –which has flourished on the high street, driven by its ability to create meaningful difference.  Built around value-for-money fashion, the brand has developed a strong emotional connection with young shoppers online via celebrity influencers and other paid partnerships.

This year’s BrandZ UK Top 75 highlights that online players Ocado and Very are the main drivers of growth. Recognised by shoppers as innovative, dynamic and responsive, they have built strong emotional connections with consumers through their customer service, range and pricing – and, ultimately, are good at telling their story. 

Heywood added: “While the death of the physical store is exaggerated, traditional retailers are having to reinvent themselves for a new generation of shoppers, connecting digital platforms and online experiences with the physical offline experience. But now with the advent of online to offline, such as the launch of the Amazon Clicks & Mortar initiative in Manchester, there will be additional pressure on an already beleaguered high street.”

Image by StockSnap from Pixabay

Tesco executives trial adjourned

Three former Tesco executives charged with fraud by abuse of position and false accounting have had their trial adjourned until September 25th.

The trio – UK managing director Christopher Bush, ex-finance director Carl Rogberg and ex-commercial director John Scouler – were charged by the Serious Fraud Office (SFO) in September 2016, pleading not guilty in a hearing in August.

The trial is expected to last 10-12 weeks, with a possible prison sentence of seven to 10 years if found guilty. Lawyers acting for Bush, Rogberg and Scouler have  entered a plea of not guilty.

The scandal was the result of Tesco revealing that it had overstated profits by £263 million in its half-year results, with the trio among eight senior Tesco staff members suspended after the false accounting emerged.

The subsequent scandal following the false accounting had a negative effect on Tesco’s share price and sparked a series of lawsuits from investors who claimed they had lost millions after buying shares based on the original account information.

The supermarket giant was hit by a £129m fine and ordered to pay compensation to its shareholders by the Financial Conduct Authority.

Trade union officials hopeful that Wilko redundancies will be ‘minimal’

Following on from last week’s redundancy consultation period with nearly 4,000 staff at troubled retail chain Wilko, trade union officials hope that the amount of job losses can be minimalised, with GMB officials stating that after meeting Wilko bosses they were hopeful that job loses can be “reduced significantly from the thousands initially feared.”

Wilko, which has over 400 stores across the UK, recently recorded a massive 80% drop in full-year profits and subsequently reviewed its operating functions, with the changes required to “ensure it is best placed to continue to thrive within an ever-changing retail landscape.”

1000 new senior supervisor roles, along with a “significant amount” of customer services roles, would be created as part of the restructure.

Discussing the meeting between Wilko bosses and GMB officials, gary carter, GMB national officer, said: “This was the first of many discussions we will have with the company during the 60-day consultation.

“We will be having further, difficult conversations during the process.

“We’ve had people on the phone to us in tears – people who have been with the company 20 or 30 years.

“We all want to see Wilko as a thriving, sustainable business with a long term future.

“It is vital GMB helps the company keep any job losses to an absolute minimum.

“It is important to ensure adequate staffing levels in their stores to maintain an acceptable level of customer service – and to make sure Wilko staff are paid the living wage.

“We are encouraging Wilko to look at alternative ways to save money, which protect existing job roles.

“It’s a hazy picture at the moment, but we will be looking at each store individually with Wilko.

“There are going to be redundancies, but we are very confident these can be reduced significantly from the thousands initially feared.”

The news of redundancies at Wilko comes hot on the heels of the big three supermarkets, Tesco, Sainsbury’s and Asda, all announcing job cuts as part of an ongoing restructuring strategy.

Tesco and Dixons Carphone forge new deal

Tesco has confirmed a new deal with Dixons Carphone to trial concessions within some of the retailer’s largest supermarkets.

Dixons Carphone, which owns tech retailer Currys PC World, will launch two new outlets this summer in Tesco Extra stores located in Milton Keynes and Northampton.

Both concessions will stock a range of Currys PC World products, including white goods, computers, televisions and accessories, along with Dixons Carphone laptop repair service.

In a direct response to its key rival Sainsbury’s inclusion of Argos stores, Tesco said the new partnership would offer customers the “best possible range of services”.

Both stores will be on trial for a year before any decisions are made regarding further roll-outs.

“We’re always looking at ways to offer our customers the best possible range of services in our stores,” Tesco UK chief executive Matt Davies said.

“We think this is a winning combination for customers and look forward to opening the first outlet in our Milton Keynes store in July.”

Dixons Carphone’s UK and Ireland chief executive Katie Bickerstaffe said: “Customers tell us they want to pick up the latest electrical products conveniently and at competitive prices, with expert advice and from someone they trust to keep them working seamlessly.

“This trial gives them all of this during a weekly grocery shop, which we hope they will enjoy.”

 

 

 

Tesco to settle accounting scandal for £235 million

UK retail giant Tesco has confirmed it will pay out £235 million to settle separate investigations by the Serious Fraud Office (SFO) and the Financial Conduct Authority (FCA) concerning its 2014 accounting scandal.

Here’s how it breaks down, according to carious reports – The firm will will pay a fine of £129 million as part of a deferred prosecution agreement with the SFO, although this deal requires court approval.

It will then separately pay the FCA something in the region of £85m in compensation to investors relating to the trading statement from August 2014 in which it overstated profits.

Tesco will also pay legal costs associated with the agreements, with thee total exceptional charge’ expected to be £235 million.

To recap, the SFO began its investigations back in October 2014 after a shortfall had been found in the retailers accounts relating to payments from suppliers of £326 million.

Three former executives, including ex-Tesco boss Chris Bush, former finance director Carl Rogberg and former commercial director John Scouler, were charged last year with offences including false accounting and fraud by abuse of position. All three are due to stand trial next year.

Tesco is accused of bringing forward payments to flatter its financial results as sales by the retailer fell.

It had been suggested that Tesco could be facing a substantially higher fine – In a January 2017 interview with The Guardian, Mike Dennis, analyst at Cantor Fitzgerald said that the SFO could fine Tesco more than £350m and force it to repay hundreds of millions of pounds to suppliers that it claimed in what has been called “arbitrary unjustified cash payments”.

 

Tesco also received lawsuits from shareholders relating to the scandal, although it is believed that some of these have been settled amicably.

Tesco cuts 1,200 head office jobs

A week after announcing that 1,100 jobs would be cut at its Cardiff call centre, Tesco has confirmed that it will slash 1,200 jobs at its head office.

Staff at offices in Welwyn Garden City and Hatfield face the cuts, with jobs at the firm’s Birmingham office and the supermarket’s tech and retail support centre in India also affected.

It’s the latest in a cost-cutting exercise by its chief executive, Dave Lewis.

A spokesperson for the company said: “This is a significant next step to continue the turnaround of the business. This new service model will simplify the way we organise ourselves, reduce duplication and cost but also, very importantly, allow us to invest in serving shoppers better.”

“We have made good progress so far in our turnaround but we have more to do. We will work with colleagues to support them as we go through this important transition.”

Lewis has earned the nickname ‘Drastic Dave’ for his reputation of hard cost-cutting at both Tesco and his previous company Unilever.

In his first 12 months at Tesco Lewis cut 5,000 head office and store management roles, along with 4,000 roles overseas. 48 underperforming stores were closed, resulting in nearly 2,500 jobs lost. In April this year a further 3,000 jobs were put at risk when the company decided it would cut night shifts for shelf stackers at its biggest supermarkets.

Tesco launches new ‘Food Love Stories’ campaign

Tesco has today launched ‘Food Love Stories brought to you by Tesco’, a new campaign which aims to highlight passion, care and nostalgia in food.

Each month, the campaign will introduce food love stories to emphasise the importance of food and the effects it brings.

The stories aim to capture the mind-set of its customers throughout the year, from wholesome, hearty meals in January, to fresh, vibrant meals perfect for a summer evening.

“We’ve always taken great pride in the quality of our food” explained Michell McEttrick, group brand director at Tesco, adding that the campaign aims to put food at “the very heart of our business and tells the stories behind the meals we all make for those closest to us.”

The ad campaign will appear online as well as with spots on Coronation Street, Emmerdale and The Undateables. Recipe cards and ingredients are expected to be available at all large stores, as well as online at tesco.com

Tesco employees take legal action to acquire lost pay…

In light of 9,500 female Asda workers successfully winning a major step in their battle for equal pay, Tesco is now facing legal action from 17 of its ‘extremely unhappy’ employees who claim they lost wages by working anti-social hours, and targeted by the company’s pay cut strategy introduced in February.

The retailer’s changing pay rates for weekend, bank holiday and night shift staff has sparked outrage, with the law firm Leigh Day – which also represented Asda staff in their case – claiming that long-serving employees in particular are ‘especially angry that they only found out about the decision when news was leaked to the national press in January 2016.’

Leigh Day believes that the pay changes – agreed with staff representatives and the shopworkers’ trade union, Usdaw, could affect up to 38,000 employees.

A spokeswoman for Tesco commented in a statement: “Earlier this year we announced a pay increase of up to 3.1 per cent for colleagues working in our stores across the UK, in addition to a 5 per cent turnaround bonus. As part of the pay negotiations we also agreed to simplify premium payments to ensure a fair and consistent approach for all colleagues. The minority of colleagues who were negatively impacted by this change were supported with an agreed lump sum transition payment.” 

Tesco facing £150 million claim following infamous accounting scandal…

Following the suspension of four senior executives in 2014 after it was revealed that £250 million in profits had been ‘artificially inflated’, Tesco is set to come under further legal woes as 60 shareholders have filed a claim worth £150 million in a bid to redeem losses made.

With fraud and false accounting charges brought to three individuals – the former finance director of Tesco UK, Carl Rogberg; Tesco UK’s former managing director, Christopher Bush; and the former commercial director for food, John Scouler – the claim is reported to have taken two years in total to put together and is expected to be filed at the High Court later this month.

Chief investment officer, Jeremy Marshall of the litigation funders, Bentham Europe, commented: “This is the first wave. There will be a second series of investors that will join a bit later. A lot of people thought this case would never get off the ground.”

 

Read more details on the claim here

 

Tesco to close F&F website…

Tesco F&F storyDespite a strong performance from Tesco in the last few months and a huge turnaround from the 2014 accounting scandal, the supermarket chain has decided to close down its standalone F&F clothing website after an active seven years.

In a statement, a spokesperson claimed that the F&F website will be brought together with Tesco Direct to create a ‘comprehensive view of all non-food products’ and to make the shopping experience as ‘simple and easy as possible’.