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Customer loyalty warning for Tesco

Customer loyalty warning  for Tesco

An analysis of consumer brand loyalty for the top 10 grocery stores in the UK has revealed Tesco is failing its customers.

The brand, which ranked number one in 2004, has now slipped to sixth ranking.

Waitrose is the store that consumers have most loyalty to, followed by M&S and Sainsbury’s. Perhaps most surprisingly, Aldi and Lidl score higher than Tesco and Asda in the customer loyalty ranking for the first time, as fourth and fifth respectively.

Tesco still outperforms all other grocery stores on having a wider range of goods (59 per cent compared to nearest competitor Sainsbury’s 38 per cent) and setting trends (47 per cent compared to nearest competitor Asda at 29 per cent).

However, its measures of  customer loyalty (the Voltage Measure, which also is a good indication of likelihood of the brand to grow) has dropped significantly since its top position in 2004 to just +0.5 (0 is average score) and now ranks sixth. Waitrose has a score of 6.9 followed by M&S at 4.8 and Sainsbury’s at 3.4.

According to global brand director at Millward Brown, Peter Walshe, who managed the BrandZ study, “Waitrose is maintaining a unique identity that appeals to consumers, while M&S is recovering strongly and Sainbury’s is getting its confidence back.

“The huge decline in customer loyalty for Tesco, at a faster rate than any other British grocery store, is an indication that many consumers are acting on a growing desire to buy quality products whatever the price.”

Waitrose scored highest (70 per cent) as the store that consumers believe sells better quality produce compared to Tesco’s 26 per cent, which was down 5 per cent from the previous year.

Asda leads on being the store that most consumers believe offers more acceptable prices (56 per cent) followed closely by Tesco at 54 per cent (though more people believed Tesco’s price promise the previous year (60 per cent).

Tesco is not only under attack on quality and service from Waitrose, Sainsbury’s and M&S, but also on the price front from Aldi and Lidl as well.

“Sales of Tesco are doing well despite dropping customer loyalty”, concluded Walshe. “They are still the most popular British supermarket. British consumers like to grumble but often act differently: convenience and location play a big part in their decision to continue to shop at Tesco.”

The Millward Brown BrandZ brand equity study (commissioned by WPP Group) monitored the opinions of 400 UK adults who buy groceries for their households, and quantified and diagnosed the strengths and weaknesses of the top 10 UK grocery store brands.

AJR
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