Falling Out of Love with Big Data: Where Tesco went wrong
Ever dated a clinger? You know, the partner who tried a little too hard? Well I was reminded of clingers the other day when shopping in Tescos and I think their financial results confirm my fears.
Tesco’s Troubles..... Tesco’s falling profits are the worst for 20 years. This despite spending £200m slashing prices in a failed attempt to stop defectors to Aldi and Lidl. Why is this happening? Tesco’s CEO Phil Clarke suggests ‘we aren’t sending shoppers a clear enough message’, but I think their problems go deeper than that and its going to take more than a few price cuts to put it right. Big Data, Big Mess.... Tesco’s got to the top through ‘big data’, made possible by their revolutionary Clubcard. According to Terry Leahy, this was ‘the first example of big data in action'.Through detailed analysis of shopper receipts Tesco’s magically predicted what we wanted to buy and made it cheaper for us to buy it. It was almost as if they wanted us to spend less - paving the way for a deeper, more trusting, and, crucially, more dependent relationship.For a while, the strategy worked brilliantly and other supermarkets followed suit, sparking the zero-sum game of ‘price trackers’. Now, if we have the time and inclination, we can claim discounts on items we might buy cheaper elsewhere. It's a free-market economist's wet dream! But, as the numbers show, something in this cozy relationship is now definitely broken. Loyal customers have tired of all this attention - no longer feel the same excitement - may even be promiscuous - and are drifting away because the thrill has gone.Tesco's over- attentiveness, achieved through an over-reliance on big data, is beginning to feel claustrophobic. They are starting to feel clingy...
Enter the Challenger.... But what’s this? Onto this generic shopper dancefloor struts Aldi and his less sophisticated cousin Lidl, straight off the Ryanair from Stuttgart.At first, these down-to-earth Germans seemed a bit of a joke with their dodgy logos and bargain basement approach.
Compared to the slick ‘retail experiences‘ of Tesco, Asda, Sainsbury’s and Morrisons, they looked like the kind of guys who’d wear white socks with their sandals, and a shopper experience with all the finesse of a bring-and-buy sale. They were a handy option if you were short of cash at the end of the week, but not somewhere you’d seriously spend big money. But gradually, something changed. As we grew to understand their approach and dropped our guard a little, it dawned on shoppers that they were offering something more straight-forward and honest than Tesco and before long we began to flirt with them ourselves. These supermarket don’t pretend to sell everything under the sun or 'embrace our lifestyle' and they make no apology when they ask us to try their cheap and cheerful products. In fact, Aldi’s long- running ads gently mock the idea that expensive brands are somehow better. As straightforward as Polish plumbers, Aldi and Lidl don’t bend over backwards to please, and we respect them more for it. Shopping in one of their stores is actually a bit of an adventure as you’re never quite sure what you’re going to walk out with. In today’s rationally-driven shopping environments, that’s quite an achievement. I mean, when did you last think a trip to Tesco was a bit of an adventure? Aldi has made shopping fun. Cocky, confident, a ‘bit of rough’, with an ‘easy come, easy go’ attitude that demands no commitment. It's understood that noone gets hurt if you walk away. By comparison Tesco wants you all to itself, has over- thought its offer to the point of being manipulative - and as a result, is increasingly hard to love.You can see the shopper response to their clinging neediness reflected in their financial performance. Conclusions... So what can we learn from this analysis? I reckon it’s this: Good branding beats Big Data every time Big Data assumes shoppers are rational and logical but they aren’t We are weary of being over-marketed to.
We need to get back to building relationships with shoppers that go beyond the rational We need to give shoppers more room to make their own decisionsIn the parlance of relationship counsellors, we’ve got to let go and stop being so clingy More than anything, we’ve got to step way from Big Data if we’re going to allow this happen