In a previous post I asked the question “Can you afford to pay minimum wage“, I used a story about my experience with the local Tesco Express to illustrate my point. I didn’t intend it as a critisim of Tesco, but it turns out that Rob from Tesco has read my blog and he felt I was wrong. As a result he’s kindly written the following guest post that should help small business owners turn the opening of a new Tesco near them into a business opportunity rather than a crisis. Here’s what Rob has to say:

“Having worked for a number of large retailers over the past 20 or so years and spent the last 5 years at Tesco, I have become accustomed to seeing regular and predictable criticism of ‘Big Bad Tesco’ I thought I would offer some of my experience to small business to try and help them to view Tesco as much as an opportunity as a threat. There is a lot that Tesco do which can be used by small business, and there are also opportunities to be had by being close to a Tesco store. I don’t claim to be an expert, but I see some strange activity by small retailers close to my store, which leads me to believe they feel they need to compete head – on, as Tesco must want to run them out of town!

Please take my comments in the spirit in which they are given, I don’t want to patronise anyone, simply to offer a different perspective of Tesco as opposed to the usual scare mongering and criticism.

Manage absence.
We all know how much absence costs a business. However, many businesses large and small simply tolerate employees who are consistently absent. I’ve worked for a number of large organisations but only one – Tesco, manages this issue effectively and consistently.

Tesco policy works like this. When an employee is absent, on their return their absence percentage over the previous 6 months is calculated. If the have been absent for more than 3% of their contracted hours or have been off three times or more they will be invited to an investigatory meeting. At the meeting they will be questioned about the reasons for absence, and if there are no mitigating circumstances, this meeting will move to a disciplinary meeting where they may receive a warning. The employee may also be offered support if they have a serious problem and this may result in a change of shifts or role for example.

The result of this policy is that those employees tempted to `chuck a sickie` either think twice or eventually get managed out of the business.

Poor attendance is the number one reason for dismissal at Tesco. This policy would be simple and effective for a small business to use and the benefits for a small business are greater as absenteeism in a small business is much more damaging.

If something isn’t working – change it or stop it.
Tesco don’t procrastinate. When a new policy, procedure, or product are introduced and are problematic, they are quickly changed or removed. They are not afraid to say ‘ok, we tried this, its not working, so we are changing it or removing it’. Too many businesses will sit on a problem and rack up costs in lost productivity or sales as a result.

Listen to and watch your customers.
How many businesses really listen to their customers? Many people assume that if they can’t find what they want at Tesco then that’s the end of the matter. However, Tesco stores will change their range if customers ask for products. Of course if a product is brought in at the request of customers and fails to sell, it will be removed, but more often than not the product will justify its shelf space.

What I mean by watch your customers is observe their habits and trends. Of course Tesco has a huge database which does this for them. However most EPOS systems will track average transaction values, number of items purchased etc. What Tesco do particularly well is act upon the trends their database shows them. For instance, they know that customers who buy nappies also buy more beer! This is because Dad has reduced his visits to the pub since baby came along and drinks at home!
I’m not suggesting a small business can spend millions on state of the art systems, but actively watching what customers buy, with what products, and what time of day may throw up some opportunities.

Know your competitors and react quickly.
Tesco, and most of the multiples are good at this. They watch competitor activity very closely and will do all they can to beat or match prices. Tesco see their competition as the large multiples and, with respect, aren’t interested in the sole traders or even the retailers who may be well known in a local area. This throws up some opportunities for smaller businesses. Watch your local Tesco (or other big supermarket) and you will notice the trends in their promotions. Tesco promotions are 4 weeks long and change on Tuesdays. Their point of sale tells you when a promotion ends and usually they keep to these end dates. However, I have lost count of the number of occasions when a local smaller retailer has run similar promotions to Tesco probably because they think that is how to beat them. For example, if Tesco are running a BOGOF on Nescafe at £1.99 a jar, he will run a promotion on Nescafe down from £2.50 to £1.75. In my opinion he should look at the end date of the Tesco promotion and start his promotion then. If he were smart he would notice that the Tesco promotions are very predictable and he could time his promotions to pick up business in his own right rather than try to piggyback on to a Tesco offer he can’t match.

Get your store known by Tesco staff.
A typical Tesco store will employ from about 20 in a small express to about 1000 or more in a larger extra store. The average for a superstore is about 350. With the exception of some of the managers, all of these staff will live locally and they know a lot of their customers. If the staff know your store they will be able to advise their customers what products you stock. The staff are asked every day if Tesco stock this product or that, and the next question if the answer is no, is do you know where I can get it? Make yourself known to the staff on customer service and you will soon start to get referrals. Of course if you offer a discount to Tesco staff it will help your cause all the more!

Anyway, I’ll end this now, as it’s already longer than intended! I hope it’s of use to someone, and if not, that’s fine. As I said at the beginning I just wanted to give a different perspective and do my bit to dispel the myth that Tesco are the evil empire trying to destroy small businesses! Every little helps!”

Some great advice from Rob there – Thanks Rob! It always amazes me how willing people are to share their expertise, as Rob has kindly done. Sam Walton also has a number of suggestions for small businesses (which include the last two that Rob mentions) in his book. So it’s time small businesses took note and started seeing the likes of Tesco and WalMart as opportunities not threats.

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