Thursday, 28 July 2016

Is Tesco beyond redemption?


I once liked Tesco rather a lot. This was in the long gone glory days. Is it time to dip my tow in the water once again?

Supermarkets can make a good stock market investment as the average customer usually gets to learn what is going on before the experts. Warren Buffet sold his Tesco holding far too late. 

Both photos are of the Cheapside Tesco in the City.

Tesco was only a few years ago Britain's most admired company. It could do no wrong in the business pages but customers such as myself noticed something was wrong long before the financial press. This direct experience of the general public often trumps expert research. Warren Buffet (a very smart guy) was heavily invested in the good times but followed the stock right down.

First the shops developed a neglected look. There was nothing wrong, particularly. They just looked un-cared for. Prices were high and the company (rather arrogantly) boasted of it's industry leading margins to shore up the share price. Then they started sacking the shop staff which created a depressed and fearful air.

Now Tesco have new management who are simplifying the company and cutting costs. Nothing too dramatic has happened to the customer experience so far but it can only improve.

Prices remain high. With exceptions.

Furthermore the accounts were misleading. Various very creative things were being done with the accounts that Warren Buffet could not have known about- but a customer possibly could have.

Nevertheless I am returning as an occasional customer.

Tesco are still good at the things they always were good at. The problem is that they have not advanced while others have.

Tesco invented the '£10 meal deal'. This is a supposedly restaurant quality meal for two that may be cooked at home. The main draw is that it comes with a bottle of wine and Tesco 'finest' wines are actually very good.

The '£10 meal deals' still exist. They are still tasty but these days the portions seem a little small. The loyalty scheme, Tesco Clubcard is still good- but again loyalty schemes are common now.

The main draw with Clubcard is that it is possible to spend points on things other than food. In fact the value increases when transferred to other schemes.

All together this makes Tesco just about worth a visit. A £10 meal deal consists of a main course (small), a side dish, a pudding and a bottle of wine.

It also gets me ten Clubcard points. These may be transferred out and grow in value four or eight fold while doing so. This translates to twenty or forty pence.

Not much, but as the advertising says- every little helps.

In addition it is possible to upload the receipt to Quidco and receive payment for doing so. Not much but worthwhile and you may join free of charge from this site.

Tesco offers marginally good value when returning home on a Friday evening when one has just been paid and does not wish to cook a full meal.

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