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Horse meat scandal puts grocers through the mincer

January 17, 2013

TescoUntil a couple of days ago, few outside the food retail and logistics business would ever have heard of Silvercrest. Now it has achieved household notoriety as the weak-link in the food chain that has served illegal horse meat up on British tables, in the guise of own-label supermarket beef burgers.

The reputational damage has, rightly, been severe for all those involved. Tesco – which fessed up to at least one line of its apparently legit beef burgers being contaminated with 29% horse meat – has seen £300m wiped from its stock market valuation overnight and has now taken out full-page ads in most national newspapers, grovelling abjectly. The timing could not have been worse, from a corporate point of view. Just days ago, a halfway decent set of financials had seemed to indicate that Tesco was on the ramp of recovery.

Luckily for Tesco, it is no longer alone. A host of other high street names – Aldi, Lidl, Sainsbury, Asda, the Co-Op, Morrisons, Burger King among them – have now opted to clear their shelves of the offensive products. In some cases because they use the same supplier, ABP/Silvercrest, in others merely as a “precaution” lest the same fate might befall their own supply chain. Only McDonald’s and Marks & Spencer have been able to stand aside, smugly waving a clean bill of health.

Their smugness is unwarranted. This disaster could so easily – in only slightly modified circumstances – have happened to them.

Some might argue that the horse-meat scandal is little more than a storm in a tea-cup, got up by the media. After all, no one died and no one is likely to: horse meat is eagerly consumed all over the globe, from Kazakstan to Argentina, as a tasty substitute for the tougher, stringier beef that can be bought for about the same price. Indeed, there’s not a little hypocrisy in this country about the cultural taboo surrounding horse meat. Until about 100 years ago, the Brits themselves were avid consumers of the stuff. Only more recently have we developed the refinement of conscience that prohibits national consumption, while allowing us to send up to 10,000 nags a year to specialist abattoirs, there to be despatched for the perverted pleasure of less civilised foreigners.

Alas, the ramifications of this affair go somewhat deeper. Imagine, for a moment, that instead of horse meat (and elements of pork), those eagle-eyed  inspectors at the Irish Food Standards Agency (FSAI) had found the minutest traces of human DNA. The uncontainable revulsion – far from affecting a few animal lovers, Muslims and Jews – would be universal. An official inquiry would, there and then, be instituted into how these three wise monkeys – the suppliers, the retailers and the regulator – had, through cavalier negligence and the unobstructed pursuit of greed, been allowed to corrupt the integrity of the food chain. Because, make no mistake, this little cock-up is all about money. The burgers most tainted were those from so-called “value” products where the cost of ingredients is at all times under pressure. Retailers want to satisfy their customers with the lowest possible prices consistent with food safety regulations. The suppliers – browbeaten by the retailers – seek low-cost substitutes (in this case from the less  punctilious Netherlands and Spain, where the consumption of horse meat is legal). And the UK regulator takes a passive, compliant attitude to anything that is outside its immediate remit (no conceivable threat to health, so why bother with DNA tests?), suggesting a “lite-touch” relationship that is too cosy with the industry it is supposed to govern.

It makes you wonder why the FSAI could be bothered with such tests, but the UK’s FSA could not. Or indeed, why the retailers didn’t carry out such DNA tests themselves. After all, it’s their brand reputation which is going through the mincer because they have not.

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Tim Mason – end of the road for the other half of the Tesco dynamic duo

December 6, 2012

Tim Mason, former chief executive of Tesco's Fresh & EasyChief executive Philip Clarke’s ruthless dispatch of his number two, Tim Mason, is a final reminder – if any were needed – that the past is another country, so far as Tesco is concerned. They did things differently there; they will never do them the same again.

Eventually, someone had to pay the price for Tesco’s enormous strategic folly in setting up – from scratch – the ironically-named Fresh & Easy retail venture in California. One thousand stores were promised in 2006, when the initiative was hatched; 200 have actually opened and nothing but a £1bn loss has been banked. By rights, the faulty judgement was Sir Terry Leahy’s (as he himself has admitted). But Leahy has long since departed as chief executive; while Mason fronted it and is still very much in the public eye. Mason offered to conduct the strategic review into Tesco’s US operation himself, but Clarke needed a scapegoat and declined the offer. Mason had to go.

Arguably, however, Mason set himself up for a fall with his own poor judgement call in 2006. He should never have allowed Leahy to prevail upon him to undertake mission impossible in the first place. The USA – even in the heady early noughties – was widely perceived to be a graveyard for aspirant UK retail brands. Marks & Spencer, Sainsbury and several others had broken their back on the same reef – and paid the price in years of dysfunction. But Tesco, at the time, was in the grip of advanced corporate hubris: as the head of world’s most successful retailer, Leahy was convinced he would be the one to buck the trend.

And who better to lead the vanguard than his most trusted lieutenant, Mason? Mason and Leahy were the dynamic duo at the heart of Britain’s most successful retail story. Leahy was the sharp business brain, and Mason the marketing man with an uncanny, intuitive feel for what the customer wanted. Together they had not only assured Tesco’s dominance in the UK retail market, but put an unchallengeable distance between Tesco and all its competitors – encapsulated in a single, extraordinary, statistic: By 2005 £1 in every £8 spent in Britain’s shops went to Tesco.

The feverish back-story to all this success was more disquieting. What would happen, in the not-too-distant future, when Leahy retired? Leahy clearly supposed that Mason could make the leap from marketing to corporate leadership that he himself had so effortlessly executed. Mason, who joined Tesco in 1982 and had headed marketing since 1997, was desperate to prove him right, and eagerly clutched the poisoned chalice of Fresh & Easy.

The transition fatally upset the balance of power at Tesco. Mason may have had his fair share of bad luck in California, but his operations skills were clearly inferior to those of Leahy. With the result that, as US losses inexorably mounted, he was passed over when the succession issue finally came to the fore. Not only that. Mason’s marketing nous was sorely missed back home, just when Tesco’s UK operation most needed it.

When Mason – then group marketing chief – decamped to America, he took with him his head of UK marketing Simon Uwins. Their UK successors lacked finesse. High turnover of subsequent personnel did not help. But something other than stability was missing – that old Tesco marketing magic. Marketing became too formulaic, and too sales-obsessed.

While Tesco struggled to find a new compass-bearing in post-recession Britain, it let its competition off the back foot. Asda, Sainsbury’s and Safeway (now recast as Morrisons) began to catch up. The Tesco offer, by contrast, began to look tired and over-extended (particularly in non-groceries). The retail behemoth was engaged on too many fronts at once and it showed – in declining profits and advertising campaigns that lacked the common touch.

Would this have happened if Mason had actually been chief marketing officer in more than name? That’s the thing about subjunctive history – we will never know. An easier lesson to draw from the Mason story is one about symbiotic work relationships. Corporate success is rarely the product of a unique talent. Would Mason and Leahy in their heyday ever have succeeded to the extent they did without each other? I suspect they would not.


Cook acts after Browett upsets the Apple cart with half-baked retail recipe

October 30, 2012

The surprise is not that John Browett, former Dixons CEO and Tesco high-flier, quit Apple after only 6 months. The surprise is he wasn’t fired earlier: or indeed that he was hired at all.

Not that there’s anything wrong with Browett’s retail skills, in their place. Which is, or was, running a British high street retailer; not at the helm of the retail arm of a global corporation fanatically dedicated to innovative product launches and superior customer service.

The announcement of Browett’s departure, which coincides with – but is only tangentially connected to – the sacrificial dispatch of Scott Forstall, head of iPhone software (for the horlicks he made of the new Maps app), has been greeted with widespread “told-you-so” cynicism. And nowhere more articulately than in the comments section of The Telegraph online.

My own favourite? Quote from Mr Cook : ‘Mr Browett had a commitment to customer service “like no one else we’ve met.” ‘ Similar to Morecambe and Wise writing: ‘We shall tell all our friends’ in the visitors’ book at a particularly awful Blackpool b&b.

Quite. The fault lies not so much with Browett (who is in any case going to walk away with much of his £36m golden hello intact) for initiating ‘pile it high and flog it cheap’ tactics – the only thing he knows – but with Apple’s chief executive Tim Cook. Whatever was he thinking of when he made the appointment late last year? Browett is the complete antithesis of everything Apple stands for.

It’s not about command-and-control retail structures where costs are minutely controlled. It is about money-being-no-object where customer service is concerned. It’s also about silo’ed autonomy, something alien to Browett’s own retail culture.

Cook can chalk this one down to inexperience. But it does make you wonder whether he’s got a sufficient measure of the “vision thing”.


Poor old Diamond Bob – a martyr to Barclays’ brand values

June 28, 2012

BarclaysA lot of people are accusing Barclays Bank and its chief executive Bob Diamond of racketeering. Acting like white-collar gangsters, in other words. They say the bank and its principal directors colluded in serial distortion of the interbank rate, Libor. What this means in plain English is that they beggared us – the saps who are their customers – with artificially inflated interest rates on loans and mortgages  – in order to enrich first themselves, through bigger bonuses, and then their shareholders, through bigger dividends. Barclays has been fined a total of £290m by the regulatory authorities on both sides of the Atlantic. But it’s the thin edge of a very thick financial wedge. Once the lawyers get weaving on behalf of aggrieved customers, who knows where the liability will end up?

Martin Taylor, a former Barclays CEO himself, summed it up best on this morning’s Today Programme. He said that Barclays had engaged in “systematic dishonesty” between the years 2005 and 2009. While he didn’t explicitly link Diamond – who then happened to be head of BarCap, the division most closely tied to the scandal – with the gigantic swindle, he did say that chief executives set the cultural tone of the businesses they run. Implication: Diamond should retire to the discreetest room in his penthouse suite and make good use of a service revolver. Diamond – Taylor implied – may, or may not, have colluded in such corrupt dealing practices; but because they happened on his watch, he was at very least grossly negligent.

Now I know what I’m about to say isn’t going to be popular, but I’ll say it all the same. Was Bob so very wrong in what he did – or rather, for the sake of any legal eagles looking in – er, what he didn’t do? I mean, at least Barclays Bank co-operated with the investigative authorities, whereas other banks did not. Barclays is paying the price of being first to fess up: a media Exocet amidships.

Then again, the bank took not a penny of public money in the wake of the Lehman Bros collapse. All right, it was pretty stupid to allow such an unredacted and inculpatory email trail to get into the hands of the regulators. But at least you won’t hear any trading floor intercepts along the following lines: “Dude, thanks a billion in Treasury credits. I owe you big time. But not as much as I owe the taxpayer. Come over after work and let’s break open the Bollie.”

I’m not sure the same will be said of RBS and Lloyds. Both were big recipients of taxpayers’ bail-outs, and both – along with HSBC, Citigroup, JP Morgan, UBS, Deutsche Bank and others I probably don’t even know of yet – are, so it seems, up to their gills in interest-rate-rigging mire too. Poor old RBS. Talk about reputational damage: it’s not only guilty of systemic incompetence with customers’ direct debits, but of “systematic dishonesty” in charging them higher interest rates as well. Will this publicly-owned company owned by the public ever recover?

But I digress. Bob’s is the head that everyone wants to stick on a pike over Tower Gate. That’s because everything about Bob is Big and Boastful. Biggest salary, biggest bonus, biggest ego. He is, in short, the archetypal arrogant, swaggering, fat cat.

And as such, he has been entirely consistent with Barclays brand values over the years. Do you not remember Barclays brand ambassador Anthony Hopkins telling us how, if you weren’t big, you were nothing in banking circles? You don’t, do you? So, here as an aide-memoire is a superbly-crafted ad by Leagas Delaney, dating from 2000:

Sometimes, you see, advertising really can convey complex, uncomfortable, inner truths – without the client even noticing. Bob did, of course. He’s been a part of Barclays’ cultural furniture since 1996. He took the message very seriously indeed and acted out the part. What a brand martyr the man is!


Buy an IKEA bed and have it away in Thailand. Promise

June 5, 2012

And now for something in the great tradition of Opel cars that break down, but only in Spain – and Pepsi Cola that brings your ancestors back from the grave, if you’re Chinese.

The IKEA Redalen bed, on sale in the global furniture retailer’s recently opened Bangkok superstore, is apparently a lot more seductive in Thailand than Sweden – Redalen sounding suspiciously like a word meaning advanced foreplay. Presumably, the bed can be bought in a job lot with the Jättabra plant pot, which appears to offer seventh heaven into the bargain. Bewildered Thais could not be blamed for attempting to invoke the local version of our Trade Description Act on discovering the products were not, after all, vested with mysterious aphrodisiac powers.

Product names getting lost in translation is an increasing problem for companies as the whole world becomes a potential market. Some other recent corkers:

The Mitsubishi Pajero: the car company noticed too late that pajero means “wanker” in Spanish. It was later renamed Montero.

When Sharwood’s spent millions of pounds launching a new curry sauce in 2003 called Bundh, the firm was deluged with calls from Punjabi speakers who said the new offering sounded like their word for “backside.”

In China, Microsoft’s search engine Bing sounds like “illness” or “pancake” when spoken in local dialects. Microsoft executives expertly changed the search engine’s Chinese name to biying, which also referred to a longer Chinese expression ‘you qui bi ying’, roughly meaning “Seek and Ye Shall Find.”

IKEA’s solution to the problem has been to employ a team of local Thai translators who purge the furniture names of stressful double entendres.



Who will win Tesco’s £110m advertising account?

April 13, 2012

Stand by for the most hotly contested UK advertising pitch of the year – the £110m (Nielsen) Tesco account is up for grabs.

But don’t hold your breath for a result. This is going to be a long-drawn-out contest, meticulously referee’d at every stage by agency intermediary Oystercatchers. Not a cosy inside job, pushed through on a nod and a wink from Tesco’s C Suite, as has tended to be the case in the past.

The first stage, happening quite soon, will be the selection of 13 agencies for a credentials presentation. From these, 6 will be invited to pitch, 3 will be eliminated and the winner will emerge in, oh, July some time. If all goes according to plan. So, expect the air to be thick with speculation over the next 4 months.

Let’s be clear before going any further. What’s particularly interesting about this pitch is not the fact that it is taking place now. Few readers will have failed to notice a changing of the guard at Britain’s top retailer, starting with the departure of group chief executive Sir Terry Leahy about a year ago and his replacement by Phil Clarke. Clarke is clearly a man who knows what he wants, and has wasted little time letting his senior colleagues know it too. Out went one-time rival for the top job Richard Brasher, until very recently UK CEO, after some lacklustre performance in the core operation and in came (a little earlier, as it happened) David Wood, late of Tesco Hungary, as head of UK marketing to replace Carolyn Bradley; meantime micro-managing Clarke has seized the UK helm himself.

Equally evidently, Clarke has been under heavy pressure from shareholders to shake things up, pronto. Tesco is still the UK’s biggest grocer by a wide margin, but it is a declining one. Others – practically all its leading rivals in fact – are bettering it in today’s tough market. Earlier this year, Tesco had to do the unthinkable: issue its first profit warning in 20 years, which knocked about £4.5bn off its stock market valuation in one day.

Personal animosity certainly came into Brasher’s dismissal, but there is little doubt that he was a convenient scapegoat too. And maybe with good reason. Brasher’s Big Price Drop campaign was a prelude to a disastrous Tesco Christmas. Brasher also held some rather fixed views on long-term investment. Whereas, what shareholders actually want is profits now, not in some misty future. Clarke knows that a second profit warning will effectively be his corporate suicide note.

So no pressure, Phil, to review your strategy. Ordinarily, UK advertising might seem to bat fairly low in a retail group CEO’s priorities – way beneath, for example, such operational issues as how many and what sort of new stores to open. Not so here, however. In giving Brasher the heave-ho and replacing the muddled duarchy at the top of UK management with a more focused leadership – himself – Clarke is also implicitly challenging Tesco’s long-established marketing tradition. Note that Brasher – like Leahy – came up the marketing route; before being promoted to UK CEO in March 2011, he had been UK marketing supremo since 2006. Clarke, on the other hand, is grounded in operations and IT, not marketing.

That’s why the key word associated with this advertising review is “clarity”. Having brought more focus to UK leadership, Clarke also intends to bring more focus to Tesco’s UK marketing effort. And he’s going to do it by asking some fundamental questions about Tesco’s current positioning. Are the assumptions underlying ‘Every Little Helps’ still relevant in today’s market? How does Tesco’s current marketing strategy benchmark against that of its apparently more successful UK rivals? Has the Tesco brand become too arrogant and impersonal – through servicing the requirements of the City rather than its customers? Clarke wants ideas from his agency pitch list, not just a new colour chart.

Superficially, this looks like bad news for the incumbent agency of 6 years, The Red Brick Road (or Ruby, or whatever the new digitally-enhanced business is going to be called). Although asked to repitch, it is indissolubly linked to the very marketing tradition that Clarke seems hell-bent on changing. Lineally, TRBR is descended from Lowe Howard-Spink; and the strong historic relationship forged between Lowe founder Sir Frank Lowe and Tesco top brass Leahy and his chief marketer Tim Mason. When Sir Frank split from Lowe & Partners (as it was by then called), Tesco backed his breakaway TRBR, but only on condition that Lowe creative chief Paul Weinberger was an integral part of the deal. To this day Weinberger, now chairman of TRBR, is the key mediating figure on the Tesco account (Lowe himself having retired).

That said, there are plenty of good reasons why Tesco might choose to retain TRBR’s services.

First, alone among competing agencies, TRBR will be the one tailored specifically to Tesco’s requirements. (Indeed, many would say this is its primary problem as a diversified advertising agency: despite doing good work for the likes of Magners cider and Thinkbox, it has failed to shake off the image of being Tesco’s house agency.)

Second, notice that Tesco has been careful not to pull the rug entirely from under TRBR. Up for grabs is all the consumer-facing digital and traditional (ie television, press, radio and outdoor) advertising. But not, you’ll observe, trade advertising, which is a substantial part of the overall TRBR fee package. One explanation for this, no doubt, is the sheer complexity of trade marketing; but Tesco also seems to be sending a mildly positive signal to its agency of longstanding.

Third, since this review is really about positioning rather than a creative makeover or a new catchline, don’t underestimate the skills of David Hackworthy and his TRBR planning department.

Fourth, don’t forget that Tim Mason is part of the review team. It’s surely only a matter of time before shareholders get their way and have Clarke cauterise the eye-watering losses at US venture Fresh & Easy, on which Mason currently spends two-thirds of his executive time. That will free more time for Mason’s other two roles as group deputy chief executive and, more pertinently here, group CMO. (It’s also possible that he might choose at that point to bow out; but no one should bank on it.)

Who else will compete for the account? Many prime candidates with suitable retail experience – BBH, DLKW/Lowe, Fallon, AMV BBDO, Rainey Kelly Campbell Rolfe/Y&R – are excluded precisely because they have conflicting supermarket accounts. However, Tesco has made it clear it will look tolerantly upon other kinds of agency conflict: for instance, a clash in financial services or telecoms.

That leaves plenty of possible contenders. As my associate Stephen Foster at MAA has pointed out, Publicis London is surely one of them. Historically, it was keeper of the Asda account and is now captained by former TRBR managing director and Tesco account director Karen Buchanan.

But the hot money will be on WPP. There’s some unsettled business here. Those with keen memories for this sort of thing will recall that, 7 years ago, WPP agency JWT came close to winning a big supermarket account after hiring two key Tesco agency players, Mark Cadman and Russell Lidstone, from a clearly flagging Lowe.

From what I hear, WPP is putting every resource possible behind winning the Tesco trophy. Not only is JWT throwing its hat into the ring; so are Grey, Ogilvy, 24/7 Media and CHI. Though whether individually or as part of a WPP “Team” effort I don’t yet know.

However, WPP agencies should tread with care.

Tesco will surely be aware, or have been made aware, that there is a certain amount of bad blood between Britain’s best-known agency intermediary Oystercatchers (founded by Suki Thompson and ex-JWT new biz director Peter Cowie) and Britain’s best-known and biggest marketing services company, WPP. Namely, the Everystone breakaway affair and its litigious sequel, which came to an unhappy conclusion about a year ago.

The formality of Tesco’s pitch procedure and its choice of intermediary suggests that there is no easy inside-track here for WPP chief Sir Martin Sorrell. I suspect his best course will be to keep an uncharacteristically low profile for the duration of this pitch.


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