Ireland rejoins the United Kingdom as part of Tesco’s customer service revolution

Tesco chief executive Dave Lewis announced plans yesterday to staunch the haemorrhage of customers and sales from its UK and Irish operations.

Most of the major changes outlined by the former Unilever executive, such as store closures and price cuts, apply to the UK only and won't be immediately replicated here.

Analysts, however, believe the decision to fold the running of the Irish unit of Tesco, which has close to 150 stores, into the British operation will prove significant. Ireland was previously run as part of the central European division, separate from the UK. "We expect the operating plan that has been designed for the UK to also feature in Ireland," said Clive Black, head of research with Shore Capital.

Changes

So what difference will this make? “This has many facets but in essence it is better product availability, cleaner stores, fewer queues, enhanced customer service and [eventually] lower prices,” said Black. Tesco Ireland said its pricing strategy remained separate from the UK’s, where Lewis announced cuts averaging 25 per cent on 380 items. “Our pricing strategy is tailored to suit our Irish customers,” said the company. “[But] we’re accelerating our ‘Staying Down’ campaign, which has been in the market since March 2014.”

This campaign promises to keep a lid on common products that Tesco Ireland says “matter most to customers”, albeit only for three months. The company said it has recently extended the Staying Down campaign to 500 items.

Fewer lines

Lewis also announced that he would “reset” its categories, such as household goods, ambient foods and so on.

This involves slimming down the number of product lines in each category, boosting stocks of the core products retained, and negotiating discounts with the suppliers of those goods. It says it will use those discounts to cut prices.

“For Ireland’s major food companies, Tesco’s moves should, on balance be good news,” said Black.

“Whilst the number of lines that Tesco sells will fall, key suppliers will gain a larger proportion of shelf space and there is the prospect of longer production runs and so greater efficiencies,” he said.

Tesco Ireland said it was “agreeing new joint business plans with all suppliers to have in place by the start of the 2015/16 financial year [late February],” but said it had “no specific plans to streamline” the number of Irish suppliers.

Black said there was an understanding that Irish consumers were more sensitive to the availability of locally sourced products.