Tesco Refers Shoppers to Smaller Shops
One of the first rules of success in retailing (and life, for
that matter) is that you simply can’t be all things to all people. That principle,
however, has not kept numerous small shops in various categories from going
out of business as larger chain stores focus on selling the most popular items
at deeply discounted prices.
Recently, Tesco CEO Sir Terry Leahy expressed regret over his company’s
role in the demise of small book shops in the U.K.
Eleanor Davies, manager
of one-such small shop, The Bookseller reports,
wrote to Sir Terry in October and said she could not compete with Tesco on top
titles. She then pointed out, however, that she was able to offer “less popular
titles and book-buying advice” that Sir Terry’s stores could not.
In response,
the Tesco that sits opposite Ms. Davies’ shop has put up three signs in the
store to let shoppers know they can “cross the road to Linghams [Bookshop]
where the specialist staff would love to help you.”
Ms. Davies said Tesco’s
assistance has brought her more shoppers. “Obviously
they are still going to buy all the cheap ones that we can’t compete on at
Tesco,” she
said. “But for range and other titles they may come to us.”
Discussion Questions:
What do you think of Tesco’s friendly competitive approach to the independent
bookseller in this story? Is there a lesson here for other retail giants and
do you think it likely something like this would be played out in the U.S.?
Kudos! It should be a win/win!
I salute Tesco for sending shoppers to the local book store, but wonder if they would do the same for the local butcher, when Tesco carries so many cuts of meat.
A couple years ago the big discussion was around the “Long Tail” of the Internet. Netflix explained how their wide customer base made the less well known titles in their movie library profitable. They claimed to make as much money off of their less well known titles as they did from their popular ones.
Now we hear of the small bookstore servicing the Long Tail better than the large box store. I am not sure this is sustainable, although I also regret the loss of the small retailer. I think eventually the Internet will be able to better serve the less popular items. By reaching a much larger audience, it will always be able to provide a greater selection. People are beginning to bifurcate their shopping habits. Some clothes are bought online while others must still be tried on in the store. Some grocery items can be home delivered, but some people must still squeeze the tomatoes. We are in a transition phase. As websites become more helpful and broadband is more pervasive, I think the Long Tail will be best served by the Internet. That’s too bad for the exotic retailer.
Then again, this opinion comes from someone who does not consider shopping entertainment. Which actually makes me wonder if there is another business model possible? Could malls charge admission instead of collecting rent? That would reduce the retailer’s operating cost and acknowledge that some people are there merely to be entertained.
When someone breaks someone else’s retail legs, it’s comforting to one’s sense of accompanying guilt to offer assistance in helping them get back on their feet.
That’s sort of nice, but the offender usually never forsakes the fountain of his strength. So we can expect Tesco, just as we have with Walmart, to continue to demise smaller retailers even as a helping hand is extended.
The headline is somewhat misleading in that Tesco did refer shoppers to smaller stores but to a specific smaller store. This is not a change in positioning but a one-off situation where a direct appeal to its CEO occurred. His actions were very gracious and benefits the Tesco store, its customers, and the smaller bookshop.
The same thing could happen in the U.S. That being said, the two locations would have to be very near to each other to be effective. Again, it might happen as a one-off but I don’t foresee any chains encouraging its shoppers to shop at other locations.
Small retailers have to change with the times. How many mom and pop stationary stores did Staples put out of business? Yet today it is difficult to purchase high quality stationary products. For the small retailer, they must be different to succeed. It’s like we always say, don’t try to out Wal-Mart Wal-Mart.
Record stores became tape stores and then CD stores. Today, music is downloaded into an iPod leaving only a few recorded music stores in the country. New televisions come today with an internet connection. Video on demand is the near future. Sending customers to competition when you cannot fulfill their needs is simply good customer service.
I guess I’m just a cynical old marketeer who has had many dealings with Tesco in the past and I can’t believe they do “nothing for nothing.” If it was a small town Tesco Express then, of course, they wouldn’t have the range of a traditional bookshop. However, does anyone really go to Tesco Express to buy a book??? Surely it’s for distress purchases and, much as I love reading, books don’t sit in this category.
So Tesco has probably lost no sales, the local bookshop has got a tiny bit of advertising for free, and everyone feels warm and fuzzy.
However, walk down any town high street where a Tesco Extra has opened outside the town and consider whether it really is a win, win.
This is not new. We used to do this at Blockbuster all the time when customers would ask for rare or out of print titles. It’s just another way merchants can connect with their consumers and reinforces the brand as customer friendly.
Ironically, I was just at Staples looking for a printer ribbon for a client and of course they were out of stock. When I asked for suggestions, I got a blank stare. He obviously didn’t get my telepathic message urging him to pick up the phone and call around to other locations or stores.
If you can service the customer, why shouldn’t you send them to someone who can? Isn’t that part of customer service? Give a little? Get a lot? etc….
One of the things at which Tesco works extremely hard is trying to convince people that they are wonderful and caring. This costs them nothing as they will continue to get customers in for their loss-leading bestsellers while losing nothing on books they have no intention of ever selling.
Tesco needs to try and show its good side, especially to counter some of the odd stories about individual staff members refusing to sell items such as plastic knives and forks without proof of age. Or quizzing adults on their intentions on alcohol purchases and certain films in case they share them with children at home. And fining elderly people for exceeding the time they are allowed to park while shopping. (At least one example of each of these occurrences was in British papers last year.)
This has obviously worked for Tesco as three small signs have created favorable publicity. Of course, it is not sustainable. Will they create signs in every department for every local/small business? They should (and probably will) pat themselves on the back and move on.
On a related note, there is something in her note that I would like to address. I admittedly take a pretty hard line when it comes to retail competition, but I think the mentality of struggling retailers is part of their issue. I frequently hear them say “I have a different assortment” and, especially, “I have higher service and/or more knowledgeable associates.” Congratulations. You don’t have customers.
They can blame Tesco and other large, successful retailers but the bottom line is that not enough customers value what they are offering. There is no blame or victim here.
As someone who can’t imagine ever buying a book at Tesco, Walmart, Costco, or Target, I am very thankful for local book sellers. And to be clear, not all local bookstores are on the brink of going out of business or need the help of big box retailers. Here in Portland, Powell’s bookstore which takes up an entire city block competes very well against anyone and everyone.
Does anyone remember the 1947 film, “Miracle on 34th Street”? Macy’s referred shoppers to other stores, and that made them look like the retailer that “puts people over profits.”
The fact is, how can Tesco lose with this strategy? They put a sign in a window, received international press (we’re talking about it), and the fact is, no matter how many people cross the street, it will have NO effect on Tesco’s bottom line.
As they would say in the UK, BRILLIANT!!!
It’s easy to refer customers to small businesses. Especially when you know your customers probably will not bother to go there. It would be like Disney world telling their visitors they should also visit Iraq.
Tesco deserves congratulations for its altruistic approach here and should receive some brand adulation from consumers who otherwise might have begun to resent their multi-category domination.
I’d like to hear the explanation of “why” Tesco did this and if there was any tangible financial objective associated with the move.
My guess is that Tesco was seeking a pat on the back for its brand and chose well with this tactic.