Back in 2014, global supermarket giant, Tesco, found itself in the midst of a crisis which led to a £2billion market price loss. This substantial loss came in the aftermath of the discovery that Tesco had artificially inflated profits by £250m, leading to a serious loss of trust from all sides.
Eight senior members of staff were suspended and Chairman, Sir Richard Broadbent stepped down shortly after the scandal broke.
The aggressive accountancy tactics meant that by deducting cash from suppliers’ trading accounts or extending payment dates without notice, Tesco could boost its profits, however this was proven to soon catch the company up.
Tesco quickly lost a considerable amount of reliability and trust not only from its suppliers and partners but also the public. Over the past few years, discount supermarket chains such as Lidl and Aldi have soared in popularity, knocking Tesco down the ladder with further losses to its market share.
How can Tesco rebuild its reputation?
The crisis that Tesco has experienced has not only had an effect on its market share price, but its brand reputation has taken a huge hit over the years, ultimately leading to profit loss.
Regaining the trust of the public and shareholders should now be on the top of Tesco’s to-do list, alongside repairing shareholder and supplier relationships.
Looking at the bigger picture, there are a number of elements Tesco could begin to work on in order to demonstrate dedication and willingness to change:
- Company vision and management structure: By creating a new company vision and ensuring employees at all levels are aware not only what customers expect of them, but what Tesco expects of them too, then they will embed a strong strategy creating a sturdy work force. A new management structure plays a vital part in implementing change across the company. Tesco began to bring in a number of senior staff members, all having something different to offer with regards to success of the company. This rearrangement is evidence that they are willing to start a fresh.
- Cultural change: To really drive cultural change, companies need tools that will measure and assess employee behaviour and risk. Reviewing existing training in relation to cultural norms and assessing suitability will ensure that any required alterations can implemented.
- Regaining customer loyalty: Tesco has previously been praised on its customer loyalty schemes, offering customers great deals through the use of Clubcard points and even discount tokens tailored to their shopping habits. In October 2015, Tesco introduced the popular ‘Brand Match’ scheme in which the difference of your shop is refunded (usually in the form of vouchers) if cheaper at rival supermarkets. However, Tesco went above and beyond its competitors by offering an on-the-spot reduction, something no other super-market currently offered. Continued customer-focused strategies like this will no doubt help public perception of the supermarket.
With a focus on the customer and internal staff, Tesco could come back fighting from this latest crisis. If your company is facing a crisis or if you’d like to discuss crisis management plans, get in touch with me at firstname.lastname@example.org or on +44(0)203 542 8689.