The judgement passed on Tesco’s misrepresentation on the pricing of its strawberries acts as a wake-up call, if one was needed, that customers are not to be taken for granted. To see how one single customer brings the mighty Tesco to heel and land them with a £300,000 fine will be a salutary lesson for all major retailers.
The anti-supermarket brigade will make hay with this ruling. Moreover, it is not hard to see the likes of Aldi, for instance, having a field day with this one as it is doing with its current television campaign on pricing.
Hiding behind one employee’s error is one way to explain this debacle, but given the might of the computing power around it is difficult to understand how an SKU’s price cannot be tracked efficiently so that pricing regulations are adhered to. Furthermore, it is hard to countenance that Tesco has been deliberately misleading customers; their voluntary signing up to the OFT Code of Conduct in November is testimony that they want to do the right thing by shoppers.
We can question whether Tesco’s compliance managers in store should be expected to keep on top of pricing, and whether that is in their remit in a fast moving store. However, regardless of this, Tesco’s defence of having to manage 40,000 SKUs and having thousands of lines on promotion is neither here nor there. Increasingly the consumer expects a fair deal. Moreover, a golden rule is that it is not the customers’ job to understand that the retailer has a difficult job.
So Tesco has, rightly, been quick to accept responsibility and apportion blame but the reputational damage could be great. How they deal with the undoubted media storm may well see customers questioning the price of products. How consumers respond generally and also to the mirage of promotions on offer will be watched closely by retailers.
It really has not been a good few months for Tesco having had to deal with the horsemeat scandal and the use of foreign workers. This may compound things and we can expect that Tesco will send out a clearer price message in forthcoming communications. The trust built up over years can disappear quickly, and whether this is one mistake too many remains to be seen.
John Pal is a Senior Lecturer in Retailing at Manchester Business School