What Tesco’s deli closures can teach us about the importance of customer-centricity

When Tesco announced its plans to shut deli food counters across 90 of its UK storesit triggered conversations about cost-cutting, intense market competition, and having “the right offer for customers.”

But for me, the story simply highlights how supply chain and operations are missing the point of consumer engagement.

The harsh reality is that, increasingly, they simply don’t understand their market space anymore.

What’s more, this isn’t just about retail: it’s about consumers and customers more generally.

Let me explain.

Telling the whole story

The presumption that Tesco was forced to close its deli counters because food customers no longer seek the kind of expertise, care, or attention that deli services offer appears shaky in the face of high streets transformed by artisanal bakeries, eateries, and delicatessens.

Customers care about the providence of their goods and want to know where was it produced, is it sustainable, was it produced in a green manner, how was it transported, what is the carbon footprint it produces and does it align with my values?. Tesco clearly understands this.

It’s the ‘Farm to Fork’ or end-to-end visibility initiative that would suggest as much, as would the decision to market many of its meat products using the names of quaint-sounding farms such as Willow, Woodside, and Boswell. Even if those farms, aren’t actually real.

In fact, those farms are revealing of the error the supermarket – and many other global manufacturers of FMCG products make, in misunderstanding its customers and how to deliver a customer-centric product.

Making it easier for consumers to understand the supply chain, and where their goods are really coming from, how it was produced and creating the story around the product, a narrative that the consumer can engage in.

It allows them to become more emotionally involved with the product and customers want unique products, whilst on the other hand, FMCG manufacturers want to produce at mass to control cost. When manufacturers understand the end-to-end supply chain and share it with the customers it becomes easier to identify optimizations and efficiency processes making it possible to control cost and produce customized products for consumers.

This kind of customer-centricity is what’s lacking in the FMCG market at the moment.

More visibility in manufacturing

The problem is most obvious with food because of the way we so often see it described on menus, but it applies to manufactured products of all kinds.

Plenty of ink has been spilled on the so-called ‘millennial’ generation of consumers who care about more than just price, and are more values-driven in their purchasing decisions.

Until customers are given greater visibility of manufacturing and retail supply chains, brands shouldn’t expect them to buy into the experience of shopping on offer.

And it isn’t difficult to do. The technology already exists.

Solutions such as NFC tags and blockchain embolden customers and inform them about the history and supply chain providence of the products they’re buying and create the environment for consumers to share it with friends and family, resulting in a very strong emotional connection to the product.

When Tesco announced the closure of its Direct service (which sold general, non-food merchandise) that should have been an indicator that the supermarket was failing to engage with customers and provide them with a deeper experience.

Manufacturers and retailers alike need to be better at reading these signs and work harder to introduce a more customer-centric approach to sales.

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