We explore Tesco's drop in sales to highlight what BrandIndex already predicted one month ago
Back in December 2011, Stephan Shakespeare, CEO and Co-Founder of YouGov, wrote an article using BrandIndex, a daily online brand tracking tool, in which he made observations using data on Tesco.
If this morning’s results announcement is anything to go by, these observations appear to have come true. The extent of Tesco’s drop in sales may have surprised analysts but YouGov’s BrandIndex predicted it a month ago.
The article, published in City AM, tracked Tesco and its competitors over the course of 2011. Tesco’s BrandIndex scores indicated worrying signs for the brand to which Shakespeare concluded by asking the question: “Could the sheen have come off the company that has dominated the UK grocery market over the past decade?”.
- Tesco’s Index score (a composite score of six BrandIndex measures - quality, value, customer satisfaction, corporate reputation, general impression and likelihood to recommend) suffered a steep decline over the course of 2011, with Index scores dropping from +32 (January 2011) to +22 (December 2011), placing Tesco below Morrisons (+28) in the sector rankings and just above Asda (+21).
- In comparison, Sainsburys managed to only drop from +45 to +40, maintaining the top spot.
Similarly, while looking at Value scores, Shakespeare noted that it was Tesco’s declining scores in 2011 that indicated a more serious story for the supermarket
- Tesco’s Value scores plummeted from a healthy +37 to +26 (joint last with Sainsburys).
- However, as Shakespeare pointed out, Sainsburys can fall back on its healthy scores for quality-focused measures whereas Tesco’s cannot
Values scores in 2011
The supermarket’s drop in Value scores, which leaves Tesco below Morrisons and Asda in the rankings, indicates a future of uncertainty and presents a problem for a brand that prides itself on great value as well as quality.
2011 has been a difficult year for the supermarket - resignations and troubles with the ASA and Office of Fair Trading may have, in part, contributed to UK consumer’s growing negative sentiment towards the brand – as evident by Buzz scores for the brand in 2011.
- In December, BrandIndex saw Tesco’s Buzz scores fall below zero for the first time ever.
- Tesco clearly failed to win the supermarket battle over the Christmas period - Value scores over the festive period dropped dramatically.
Index scores in 2011
And there are further worrying tell-tale signs, notably the continuing decline in sales figures and a campaign (‘Big Price Drop’) which by some accounts has failed to resonate with consumers, which indicate that Tesco’s waning scores may not be just a case of bad press but an indication that the value perception that has sustained them for so long can no longer be taken for granted.