Tesco’s price U-turn in ‘Operation Checkout’ campaign exposed

Tesco’s price U-turn in ‘Operation Checkout’ campaign exposed

The UK’s biggest retailer recorded bumper full-year profits in 2019, with a 34 percent rise in operating profit to £2.21billion – making them a strong market leader with 27 percent of the share. Competition among the Big Four has been rife for decades with Tesco snapping the top spot from Sainsbury’s in 1995 and Asda threatened to take the lead in 2003. But, 20 years earlier, things were not quite so lucrative for Tesco, and the supermarket had to take drastic actions, Channel 5’s “Inside Tesco: Britain’s Biggest Supermarket” revealed.

The series’ narrator revealed in 2019: “In 1974 after a quarter-of-a-century of growth, company profits fell.

“Tesco really needed to do something radical to grab shoppers’ attention.

“The answer was a relaunch plan to follow the Queen’s Silver Jubilee celebrations of 1977.

“Whilst the rest of the country celebrated, the store’s staff got to work.

“Tesco was going back to its roots, slashing prices across the store.”

The series went on to detail how Operation Checkout was rolled-out by Tesco.

It added: “It was called Operation Checkout and advertised in a simple, but very effective TV campaign.

“Within two years, Tesco’s sales topped £1billion for the first time and once again, cutting prices had been at the heart of that success.

“But, Sainsbury’s was still the supermarket to beat and shoppers went there for quality rather than discount prices, so should Tesco now follow its rival and go upmarket?

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“As Tesco mulled over that question, eye-catching TV ads promoted a very different kind of competitor – Kwiksave was a no-frills supermarket opening new stores in places where Tesco was having to close them.

“To try and work out the secrets of its success, Tesco called one of its rising managerial stars into head office.”

The documentary spoke to Harry Quinlan, a former regional manager, who detailed how he was sent out on a mission to learn more about German discounters.

He said: “We went into the boardroom and were met with a group of directors and they said ‘we have an issue, you and your boss are relieved of your jobs at Tesco, you’ve got a year out to go and look and assess the world outside.’

“We looked at Aldi, in Germany, and we thought that was one of the worst.

“The lighting in the store was a light bulb on a wire hanging from the ceiling.

“There were staff living above the store and when they were needed they would phone up and the staff would come down and man a checkout.”

Tesco trialled five discount stores in Liverpool, but ultimately ended up scrapping the plan.

Fast-forward to 2018 and the retailer would end up reversing this decision, with the opening of Jack’s in Hertfordshire to rival Lidl and Aldi.

Published at Tue, 05 May 2020 13:28:00 +0000