Media planning must be an issue for Tesco when £110m ad spend still leaves it in ‘squeezed middle’

Tesco CEO Phil Clarke is due to unveil his plans to revive Tesco on Wednesday although readers of the UK’s Sunday papers probably know the answers already: relaunching its value range, more staff with more kit and warmer colours in store.

The real problem for Tesco is that its ‘all things to all shoppers’ strategy is being nibbled away at by competitors who have learned all about retail efficiencies from Tesco but have decided to pursue their own niches.

So, in the latest UK supermarket figures from Nielsen showing market share in the quarter to end March, we can see that Waitrose is steadily gaining share at the top end of the market and discounters, led by German-owned Aldi but also including Lidl and Iceland, are taking quite big chunks out of the bottom end.

And long-time foes Asda (owned by Walmart, which has even more money than Tesco and it’s showing at the moment) and Sainsbury’s are performing better too, although Morrisons slipped a bit. So Tesco, just like the hapless British voter still mired in recession, is occupying that uncomfortable place ‘the squeezed middle.’

Tesco’s share only dropped from 28.8 per cent to 26.8 per cent, hardly a crisis you would have thought. So maybe Clarke is right and some fairly expensive tweaking (Tesco is talking of spending an extra £400m on its UK stores) will do the trick. But there’s clearly a trend in the UK grocery market towards people buying from a range of stores; Waitrose for the posh stuff, Aldi and Lidl for the bargains (some of which are remarkably high quality) and one of the big four when they need toilet rolls and shampoo as well as food.

In which case Tesco looks like it’s in the business of managing decline, which is definitely not what Tesco’s shareholders want to hear.

Tesco is also reviewing its £110m creative ad account out of The Red Brick Road. The only surprising thing is that it spends £110m. Where does it all go? Ask anyone to recall a Tesco ad and they’ll come up with the ‘Dotty’ campaign starring Prunella Scales and Jane Horrocks which was killed off a decade ago. So heaven knows what they’ve been spending all this dosh on.

It’s highly unlikely that Clarke and co will decide to boost the ad budget to £150m or so, to run a decent branding campaign on top of whatever they’re doing already (although they might). So the first should job, surely, should be to decide what they’re going to do without. So shouldn’t Clarke and new marketing director David Wood be reviewing the company’s media agency, Interpublic-owned Initiative, as well?

Media planing, at least, surely has to be an issue when you’re spending this much money to such little effect.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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