There are exceptions, like Usain Bolt and Mark Cavendish, but usually size prohibits speed and so it isn’t such a big surprise that the juggernaut that is Tesco, increasingly looks slow and unable to turn round.
I can recall, in a similar forecast 3 years ago before their market share dipped and they found a huge black hole in their profits, saying that Terry Leahy was passing a poisoned chalice to the new CE and so it has proved.
Now today, in a well reasoned argument, the boss of Waitrose states that the ‘Big Four’ supermarkets are living in the past and will continue to lose market share. Everyone else has of course been saying that for months but Mark Price is the first person who has accurately summed up the reasons why.
Aldi and Lidl are a small part of the issue but you only have to look at changes in consumer behaviour, some of it brought on by the recession, and the portfolio of shops the big four own to see there are other more fundamental reasons. Just look at the size and contents of the average shopping trolley. It is different and we eat in a different way to 10 years ago.
Big often means arrogant and for some reason big guys stop listening and watching. It happened at M&S, it is happening to the ‘Big Four’ and it will happen again unless there is a fundamental change in the way a big business like Tesco is run. Top teams become driven by sales and profit, stop listening to customers and cease to respond to what is happening on their doorstep.
The biggest problem for Tesco, apart from their inability to count, is their property portfolio and the sheer size of out of town stores will be a drag on sales per square foot for years to come unless they divide it up differently. I called into my local Tesco today and the first 15 metres of the number one aisle in the shop was merchandised from top to bottom in Halloween. If that doesn’t scare the markets into selling Tesco shares, nothing will.
The growth of Aldi and Lidl will slow down in 2015/16 but Waitrose will continue to forge ahead and expect to see real growth in community supermarkets again, even convenience stores. I could be wrong but customer insight is everything and because we are used to listening if I do get it wrong I’ll know before the outcome is terminal. There lies the problem with size, others just keep getting faster, better and passing you.