Today’s marketing framework is the shopworn “benefits triangle.” Draw one, and label the points of the triangle as follows:
- The lowest price
- The best quality products
- Unbeatable customer service
Then pretend you are talking to a customer of yours, and smugly say, “tell me which two you want.”
It isn’t meant to be funny, but to express a shocking truth. No business can survive by providing all three benefits at once. Walmart? Price for sure, but mostly crap product and horrid service. Southwest Airlines? A horrid product (read: cattle car). Etc. Etc.
The benefits triangle is playing out with our friends in the small-grocery sector. (Here’s our post on one of those grocers, Aldi, to refresh your memory). Some of the U.S. stores of the UK mega-corporation Tesco, known as Fresh & Easy, have decided to turn self-checkout from an option to a requirement.
You can imagine the reaction, especially by little old ladies, clumsies, tardos and such.
The two things you can have from Fresh & Easy’s benefits triangle are low prices and quality product. You can’t get service. Very simply, if you take out baggers (BYOB at Fresh & Easy, by the way) and cashiers, you have saved the grocer a big percentage of his expense, which protects the low price benefit.
If you have been brave enough to try self-checkout technology, you know it is intimidating, confusing, and certainly slower than using a cashier. And if there is a line of people waiting because one tardo can’t figure things out, well then, you’ve just taken away self-checkout’s major selling point.
Tesco, for some reason, is absolutely infatuated with making this Fresh & Easy thing work in the U.S. Since 2007, losses from the operation have piled up, well over a billion dollars’ worth. In its recent fiscal year, it reported another $300 million in Fresh & Easy losses. That’s with revenue growth of 38% year-over-year. Fresh, maybe. But not Easy.
Which means if Fresh & Easy doesn’t yield on the other two benefits, then it must continue to cut to the bone on service. Soon customers will be asked to restock the shelves after putting an item into their shopping basket. The last two customers of the day will be asked to mop the floors.
Tesco must not realize that the “American independence” thing was so 18th century. We actually have turned into quite a dependent society. Forget “want” – most American shoppers need their cashiers.