How Are The Mighty Fallen

“Crash and burn” might be as good a way as any to describe what has been happening at Brit supermarket giant Tesco lately. This was (and may still be) the world’s third largest retailer, behind Walmart and Carrefour, and was regarded by investors as a safe haven when waters looked a little choppy.

Yet, the share price is down by more than a third over the last quarter and the whole enterprise has been engulfed by a scandal involving a massive overstatement of profits.

What could’ve gone wrong and why has it all happened so suddenly? In terms of stores, there was a sense for some time that this was a retailer that processed shoppers – bidding them in one end and disgorging them at the other, clutching Tesco bags and heading back to the their cars. The stores had become more than a little faceless, and meanwhile, the competition was busy raising its in-store game.

The problem, to an extent, is that retailers that reach this kind of magnitude lose touch with what’s going on around them and see only their own stores when they look at what’s happening —  Tesco had embarked on a store refresh program, costing tens of millions of British Pounds, more than two years ago.

The dilemma, however, is that this is the proverbial retail oil tanker and turning it around, as far as the look and feel of its store interiors, is never going to be easy. The sad fact is that this is still a (relatively) good retailer that makes a very tidy profit and if you visit the new and refurbished stores, big and small, you might be forgiven for wondering why things have gone so awry.

What all of this does perhaps show is even the biggest retailers are vulnerable. Putting things back where they should be takes not only time, but almost a complete recalibration. 

John Ryan is a journalist covering the retail sector, a role he has fulfilled for more than a decade. As well as being the European Editor of VMSD magazine, he writes for a broad range of publications in the U.K., the U.S. and Germany with a focus on in-store marketing, display and layout, as well as the business of store architecture and design. In a previous life, he was a buyer for C&A based in London and then Dusseldorf. He lives and works in London.