Why are Tesco, McDonald’s and Woolworths Supermarkets Losing their Leadership Positions?

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Tesco, the British based supermarket chain, has shocked analysts with an overstatement of profit expectations by 250 million pounds and questions have been raised about accounting irregularities. This problem reflects an underlying decline in its market position. 

McDonald’s, the dominant American fast food chain for decades, is now losing its market share, experiencing deteriorating margins, a lack of success with new products and reduced sales growth.

Woolworths, Australia’s leading supermarket chain, is being overhauled by challenger Coles as it experiences slowing sales growth and a customer perception that it is losing its price competitiveness.

Customer resistance, competitive price cuts, shrinking profit margins are just symptoms of a much deeper problem. These signs obscure the real issue – these market leaders have lost their customer focus that in turn has had a negative impact on customer perceived value and customer experience. Even more fundamental, they have not embedded a customer culture that incorporates the customer insight and foresight needed to be proactive with relevant new offers that will enhance customer retention, loyalty and growth. It is this that will sustain ongoing growth, share and profit. This issue is symptomatic of many large businesses that have focused on processes, technology, cost cutting and profit margins at the expense of building and embedding a strong customer focused culture.

There is only one way to act on this – to identify weaknesses in customer culture and take action to strengthen it. Extensive research shows that the right action to strengthen customer culture will provide any business with valuable insights that will lift customer experience, increase customer retention and grow revenue. You can find more on this relationship in our book The Customer Culture Imperative.

The starting point is measurement. Retailers like Tesco, McDonald’s and Woolworths measure just about everything – financial, sales and costs metrics. But they don’t measure customer-focus culture with the same rigor. If you don’t measure it, you can’t manage it. This will show the source of customer experience and market share problems and create a focus for all in a business to implement value adding strategies founded on clear customer insight and foresight.

More and more companies are using a validated customer culture measurement tool called the Market Responsiveness Index that benchmarks those customer, competitor and strategic alignment factors that drive future performance – customer retention, innovation, new product success, revenue and profit growth. If Tesco, McDonalds and Woolworths want to retain their leadership, they should do the same.

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