Helen Edwards: How Tesco can learn from Starbucks

Underperforming stores, a value deal that didn't work, a tumbling share price and a new chief with a big task on his hands: it could be Tesco, 2012, but it applies equally to Starbucks, 2008.

Then, Howard Schultz was recalled to revive the ailing coffee-house brand, which, like Tesco today, had suffered a spectacular fall from grace as the defining offer of its sector.

Customer traffic had declined for the first time, the share price had halved in a year, and the love-hate vernacular that had always typified critical comment became noticeably absent of love.

Four years on, the brand is thriving anew, sales growth is running at 10%, new markets are being pioneered and the share price has quadrupled.

Advice

What advice might Schultz offer to Philip Clarke, standing lonely at the helm of Tesco?

Well, one simple tenet might be that drastic situations do not necessarily call for drastic measures. What can make a problem seem suddenly so alarming is that it is crystallised in a single moment - in Tesco's case the announcement of a 2.3% sales fall - even though its causes might be undramatic and multifactorial.

Once the news hits and the noise starts, though, it is hard to resist the impulse to reach for big ideas and sweeping gestures. The danger then is that the good gets overturned with the bad.

Much more subtle, and much more difficult, is the art of probing for undramatic, multifactorial solutions. This was the approach Schultz used, reversing years of brand-drift errors, with a practical, seven-point plan. It led to important, but mostly unspectacular, improvements across the board.

Back to roots

Stores were quietly revamped. Out went the primary-colour pictures of Vespas, in came earthier tones and photographic images that lionised the people and the places behind the coffee. Without any grand pronouncements, a 'back to roots' message was conveyed where it matters most: at the point of everyday brand interaction.

Product and service were improved through a new internal training scheme. In the US, all stores were closed for half a day so baristas could learn to make better espresso. Value deals that had undermined quality perceptions - such as a $1 coffee and a free refill - were phased out.

There were tougher decisions, too. Some 800 underperforming stores were axed. This is always a business call more than a brand issue, but the message it sends can nevertheless prompt a positive interpretation: the company will not trade where it cannot do it superbly well.

Schultz permitted himself one big, symbolic gesture: the simplified logo. Although it attracted much criticism, as any new logo invariably does, it is a textbook example of how to create reappraisal without a total visual overhaul.

Brand correction

Tesco and Starbucks operate in different sectors with differing exigencies, so, at the concrete level, few of the steps taken by Schultz are likely to be applicable to Clarke.

It is the underlying principle that is worth study: between the extremes of fearful paralysis and total, start-again relaunch, there is a space called 'brand correction'.

It is the option to choose when the problem you confront is brand drift - even if, at the time, it feels terrifyingly more like a skid.

Helen Edwards has a PhD in marketing, an MBA from London Business School and is a partner at Passionbrand. Follow her on Twitter: @helenedw

30 SECONDS ON - BRAND CORRECTION

It's about finding just the right degree of change to counter brand drift. The important thing is not to overcorrect - a hard balance to get right.

• The Sanctuary When Alice Avis took over as chief executive in 2005 she quietly set about correcting brand drift: she dropped the gaudy World Spa Secrets sub-brand, invested in improving the core skincare range and refocused attention back to Boots as the brand's sole high-street retailer. Three years later, the brand was sold for £75m to PZ Cussons.
• Listerine held a place in many consumers' minds as the strong, medicinal taste of their childhood, but by the late 90s people were no longer willing to sacrifice taste for effectiveness. Listerine corrected this by moving toward mint-based flavours while keeping a 'signature' strong taste.
• M&S faced dwindling sales in the early 2000s as a result of some company-convenient behaviour (refusing to accept credit cards or open on Sundays) and an increasingly older customer base. The tagline 'Your M&S' spearheaded a programme of brand correction, offering clothing sub-brands aimed at a slightly younger audience and a burgeoning new food division.

This article was first published on marketingmagazine.co.uk