2011 was a difficult year for the supermarket giant. In January, long-time CEO Sir Terry Leahy announced that he would be leaving, followed by Tesco’s bank director Andrew Higginson and commercial director for fresh foods Colin Holmes who also announced their intention to leave. Tesco launched its ‘price check offer’ which was later deemed to be misleading by the Advertising Standards Authority. The Office of Fair Trading (OFT) fined Tesco £10m following an inquiry into the price fixing of dairy products. Tesco was reprimanded by the advertising watchdog for misleadingly implying that its lettuce was available to buy within 24 hours of having been picked. Even the UK police voiced their displeasure of the supermarket. Following the summer riots in the UK, Tesco placed a £3m riot compensation claim. This came at a time when other supermarkets affected by the riots chose not to submit claims of their own.
However, perhaps the biggest news throughout the past year for Tesco has been its continuing decline in sales figures in the UK. Tesco’s sales in the UK fell in every quarter in 2011. The announcement of the most recent UK quarter sales decline was made even after Tesco had cut the cost of over 3,000 everyday goods as part of their £500m investment (Big Price Drop), in an attempt to boost sales.
On BrandIndex, perceptions of Value for the brand have shown a decline throughout the year. Tesco’s Value perception was at +37 on January 3, 2011. At the time, it ranked second overall behind only Asda and ahead of the remaining top 8 supermarkets*. Now, a year later, perceptions of value for Tesco have decreased more than any of the other top 8 supermarkets (-10.9).
Perceptions of Value amongst the main shoppers of each of the big four supermarkets** also declined in 2011. Tesco’s value perception amongst its customers is down over 10 points from the start of the year. Sainsbury’s experienced perception of value declines that were greater than the declines for Tesco, however it already had a lower perception of value score than any other large big four supermarket.
All in all, 2011 was not a very favourable year for Tesco. However there are some positive signs that their ‘Big Price Drop’ campaign was starting to attract shoppers. What remains to be seen is whether Tesco will see a reverse of fortune in 2012 on its sales in the UK.
*Top 8 supermarkets include: Tesco, ASDA, Sainsbury’s, Morrisons, Marks & Spencer, Waitrose, Aldi and Lidl
**Big four supermarkets include: Tesco, ASDA, Sainsbury’s, Morrisons