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Tesco’s ‘Poor Service’ Record
And Out-Of-Stocks

Our extensive coverage of Tesco’s Journey to America as Fresh & Easy brought this note from an American who spent a couple years in the United Kingdom:

I have been following with mild amusement your series on Tesco, and thought I would take a moment to share my humble perspective.

Having lived in Bristol, England, for two years (from 1999-2001) I shuddered to think that Tesco might actually grace us with their presence here in America.

The attitude you report does not come at all as a surprise when you are familiar with the common mindset toward the standard treatment of customers — at all levels and areas of an organization — that exists in jolly old England.

A major focus of the MBA program I did there was on Human Resource Management, and I can tell you, generally speaking for the average organization, the customer is not at the top of the priority list of people to please.

How to satisfy the workers’ individual rights in the most cost effective manner is typically of much higher concern for upper management. And it shows in the quality of service… most employees I encountered in any department store seemed to be more concerned that I might require more time than was allocated to their shift rather than being concerned with actually solving my problem.

During my time in England, I avoided Tesco stores like I would a plague, preferring to spend my time and money at Sainsbury’s, Waitrose, or any one of the small neighborhood produce/butcher shops. I found the Tesco stores to be crowded and difficult to navigate.

Most produce was unattractively displayed to begin with, and sold (although this is typical in Europe) in pre-packaged quantities, such as a 3-pack multi-colored bell pepper assortment, so it was impossible to inspect the texture and quality of the product. Overall, while of lesser cost, the quality of fruit and produce was of considerably lesser quality than at their competitors.

I categorized them in my mind as a high-volume, low cost, catch-the-cheap-bargains this week kind of retail outlet. And the sloppiness of their stores was reflected in the sloppiness in the way one was treated by their employees.

Of course, they may have changed in the past 7 years, but change is notoriously slow in England. Taking into account the impossibility of even purchasing a 20th century water spout that mixes hot and cold water lines at a home-improvement store, I very much doubt it.

And given the English superiority complex toward Americans, it is no surprise they are behaving as they are. They are approaching the “lower class” here in the US as they do in England — not realizing the standards are much more level here, that stores are much more likely to cut across socio-economic groups, and that generally, here in the US, the customer comes first — no matter what their socio-economic status may be.

I will further venture a guess that few of their executives ever visited an Albertsons, Safeway or Kroger store — their nemesis is Wal-Mart.

— Theresa Willerup
Business Development Manager
Boise, Idaho

We certainly appreciate Ms. Willerup sharing her perspective. We think, however, that, mostly, the market is the best judge of the quality and appropriateness of offering that any business makes.

If Tesco offers poor service in the United Kingdom, then it must offer other values that have allowed it to obtain over a 30% market share, by far the largest, in the UK.

Of course, the strict land use rules in the UK have made it difficult for chains such as Wal-Mart’s ASDA subsidiary to compete effectively because it is so hard to get site approvals. That is why so much of the battle against Tesco in the UK has focused on practices such as “land banking,” by which it is alleged Tesco acquires sites simply to prevent competitors from opening.

Still, there is something odd about the willingness of Tesco to tolerate the out-of-stocks that are common at Fresh & Easy.

We do know that many years ago, it was acceptable in the UK to run out of fresh items at the end of day. This was supposed to “teach” shoppers to come in early in the morning. But we have been assured by many executives at UK retailers that this is no longer the case, and out-of-stocks are, today, unacceptable.

Yet, as late as last week, we were walking through a Fresh & Easy that, supposedly, was their very top store and saw out-of-stocks that would give any executive at Kroger or Safeway a heart attack.

Some of this is hubris. At an early stage of the roll-out, the out-of-stocks were a big problem and the Fresh & Easy executives blamed a software program that didn’t have historical data. When one of the vendors suggested that they issue a clipboard to every store and have them manually call in any out-of-stocks so that they could be delivered the next day, he was treated as if he insulted their technological prowess.

Still, at base, the tolerance of these out-of-stocks is a cultural matter. Whatever the reason, there is a sense that they can disappoint customers and the customers will become “trained” to come back the next day or come in earlier. That is, as our writer notes, not a very American attitude and helps to explain Tesco’s failure in the US market.

Many thanks to Theresa Willerup for sharing her British experience.

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