So Tesco (the UK’s biggest retailer) just announced that it has been overstating its half-year profits by 25% (about £250m). It’s not clear how long this has been going on but the omens aren’t good.
Tesco is to the UK what Walmart is to the USA, minus the firearms. Thousands of stores, millions of customers. It takes nearly 30% of the UK market. It has so much food I get fat shopping there and have to go on diets all the time.
Now, Tesco’s ubiquitous marketing slogan is ‘Every little helps’. And it would appear that the company has been taking this message to heart.
Apparently it has been pushing back its costs and bringing forward it’s revenues in an effort to improve its financial position, which, in recent years, has gone from lacklustre to fairly dire.
Squeezed by new-to-Britain cut price brands like Aldi and Lidl at the bottom (which ironically originated out of the ashes of post war Germany as the population gravitated towards cheap, no-frills consumerism; there you see the Germans won in the long run) and by premium providers like Marks & Spencer and Waitrose at the top, Tesco has lost its way.
Crappy stores, foolhardy forays into the US market (any of you American readers heard of Fresh ‘n’ Easy? No? There you go.) and too many products means that people have begun to turn away from the food behemoth.
The answer was; sack the CEO (by all accounts he was a prat) and cut costs.
Previously they tried spending their way out of trouble by sprucing up the stores and training the staff to be nice. This worked, to a certain extent, but you can only get so far with dry ice under the carrots and cucumbers, and once the customer relationship specialists evaporated from the revamped stores, the feeling that someone might jump you in the imported exotic food items aisle is never too far away.
And cutting costs does not sound like a good idea. My local Tesco, spruced up only last year, already feels jaded and worn.
The new trollies are getting a bit rickety, the local addicts use them to race round the car park no doubt, and customer service is, well, whatever.
And now things have come to a head. The new CEO has sacked (sorry, ‘suspended’) four senior managers, including the UK MD, because of suspected dodgy accounting.
But hold on. If the Tesco finance team have been accused by their new chief of dodgy accounting, then every CEO of every major UK business had better take a look under the hood. Recognising an order as cash and putting off paying suppliers is, in accounting terms, as old as the moment that Adam looked at Eve and thought ‘wayhee I fancy some of that’. More likely he is looking for ways of ‘bottom-lining’ the business so that he can publicly turn it around and reap the glory.
Wouldn’t be the first time, won’t be the last.
Don’t get me wrong, I love my Tesco. Need some food? Tesco. Need some more food? Tesco. Need a box of wine? Tesco. I mean you don’t walk into the local off license and buy a box of wine. People talk. You can go to Tesco and buy the whole sodding vineyard; no one gives a toss.
If I was them (i.e. if I was a multibillion supermarket chain) I would a) focus on food and stop with the stupid ranks of TVs and crumby crockery and pillow cases and all that crap, b) bring back the really good staff that they employed to relaunch their stores and c) reduce the infinite number of products they have (like 30 different types of milk or something stupid).
But I will always shop there because a) Lidl reminds me of University and it was shit (Lidl, not University) and b) Waitrose is full of tossers, rich tossers and but tossers none-the-less.
Here endeth the rant.