INTERVIEW: Tesco

Ben Parfitt
INTERVIEW: Tesco

When Rob salter joined Tesco in 2008 he was in for a shock.

The firm’s new entertainment category director expected Tesco – with its 2,500 UK shops and millions of customers – to be one of the most desirable retailers out there. But for the games industry, that just wasn’t the case.

“My first meetings with the video game suppliers were challenging,” remembers Salter.

“What surprised me was the extent to which they were disappointed in us. They said ‘You are not really a priority’, which is unusual for Tesco.

“The manufacturers had been burnt. They invested in things and experimented with Tesco to find nothing had really happened.”

Back in 2008 Tesco was a tiny player in games. And although the supermarket behemoth promised time and time again it would turn things around, it never did. They were, as MCV once said, ‘a missed opportunity’ for video games retail.

BACK IN THE GAME

Salter had to make changes, bring in someone who could deliver on their promises, double the size of the games team and turn Tesco into a retailer that suppliers wanted to be involved with. So he hired former EUK games chief John Stanhope.

Salter added: “When John arrived we said to the industry we were going to take our games software share from X to Y, and we then spent the next two years getting on and delivering on those things.

“John has transformed our relationship with suppliers and we have put ourselves way up the pecking order with them. We have a long way to go, but it’s been a pretty decent couple of years.”

Stanhope, now Tesco’s senior buying manager for games, adds: “We weren’t delivering what we felt we should in the games market and over the last two years we’ve certainly addressed that. We have invested heavily in people and in the in-store experience, and I think we now have a proposition that is credible in games.”

GIVING US EXTRA

Tesco’s new look games team, featuring the likes of Joanna Hunt, Mark Burgess, Sarah Kaye and Paul Bangs, have fought and scrapped for every inch of floor space and every penny of marketing to ensure Tesco will never again be written off by publishers. And combined with some aggressive movements on price, the retailer has doubled its share of the market.

Salter says: “John and I came up with a bold plan for games, and our illustrious leader said: ‘Good, now where’s the plan that is twice as big?’

“Tesco is a great environment in challenging you to be ambitious. We have got more space for gaming and had more marketing resource, too.

“Every week there is a massive bun fight of who is going to get that resource. There is a finite amount of resources and we have to bid for it. And this is what we try to impress on our suppliers – when we are not negotiating with them, we are negotiating in-house. We punch above our weight in terms of the amount of space we get.

“We have some great competitors who are very good at what they do and we have suppliers that are good negotiators. But neither of those are anything compared to the fights that go on within a big retailer like Tesco, for resources, space, marketing and attention. That fight is far uglier than anything else we do.”

TESCO VALUE

Over the past 12 months Tesco has introduced pre-owned and pre-orders into its stores, but getting specialist things like this to work in a grocery environment is no easy task.

Stanhope explains: “The easy attack on Tesco is ‘What is Doris on the checkout going to know?’ In our smaller stores that is just a fact of life and part of our job is to design solutions to these problems.”

For pre-orders, the firm has developed a system where customers simply take a sleeve to the checkout – even a self-service one – and when the product is scanned a voucher is printed off. ‘Doris’ doesn’t need to worry about a thing. But pre-owned is different.

“For trade-ins we have the tech team that is knowledgeable and there to support the customer and make sure we are buying in the right type of product,” says Stanhope.

“We do have what GAME has in terms of the right technical solutions. We don’t have a store person rifling through paper copies trying to assess price. The till tells you the price and the product is paid for. It’s simple.”

Pre-owned is a contentious area for many reasons, but Tesco insists  customers are asking for it – and it isn’t to undermine its rivals or suppliers.

“Our ‘buy, play, trade’ model is working,” Stanhope continues. “Some people may look at this and think it is a spoiling technique. It’s not. There is a customer demand for it, so we are going to exploit it. As long as we have the right people in-store supporting the customer, and we are not buying the wrong gear, then it should do well.”

FOOD FOR THOUGHT

The turnaround at Tesco has been rapid, but the supermarket giant is far from finished. It wants to be the clear No.2 video games retailer in the UK with 20 per cent of the UK games software market.

“The reason we say 20 per cent is because if you look at our DVD and music share, and they are more mature markets, that is broadly where we are,” says Salter.

“There is no reason why in gaming we can’t be there or thereabouts.”

Salter adds that if they reach the 20 per cent milestone, games will overtake DVDs to become Tesco’s biggest entertainment category.

To achieve that goal Stanhope and his team want to make Tesco as specialist as possible, which includes bringing experts and entertainment desks into its biggest stores.

Says Stanhope: “The idea is that Tesco at its best in entertainment should be as good as a specialist games retailer.”

“We want to be a place where people who are really into games can shop and find the products they want to buy,”
concludes Salter.

“We also want to be a place where those who aren’t knowledgeable about games can come in and not be intimidated. I often see people and mums looking at the displays and saying, ‘What was it now? An Xbox?’ They are buying for someone else and need help to make the purchase.

“In all those regards we are not exactly where we’d like to be. For something that is quite technical for a lot of people, supermarkets are not an easy environment to pull that off. Supermarkets are busy and fast moving and there is not always a lot of people around to help.

“But increasingly, we are getting there.”

Tesco certainly has its critics, particularly when it comes to its aggressive pricing. But its rise to prominence is not just down to how much it charges for Call of Duty.
People will continue to say what they like about Tesco, but one thing they won’t be able to deny is how Salter, Stanhope and the team have turned the company from the over-promising, under-delivering retailer of the past, into one of the UK’s most important video game outlets.

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