Lessons we can learn from Tesco’s ‘second face of power’

Digby Scott considers the lessons that can be learnt from supermarket giant Tesco’s reaction to the recent Horsegate scandal

Having suffered a public whipping over Horsegate, supermarkets are going to change the way they buy meat.
No longer will they seek the cheapest europork they can lay their hands on and use it as a lever to drive down the price of assured British pork to loss-making levels.
In future they will treasure their British supply chains and ensure producers receive a fair and sustainable price. And in so doing they will delight their customers, who want good food from hard-working, trustworthy British farmers.
That’s the theory anyway.
And most people in the pig industry would agree the industry’s promotion and marketing machinery should be mobilised to help move supply chains in this desirable direction.
But we could be pursuing an unattainable goal because the large retailers are far from being bloodied, bowed and broken. They may not be as desperate to create a new meat-buying model as we’d like to think.
By employing shrewd marketing tactics, they have emerged from Horsegate almost unscathed. Yet again, they’re setting the agenda, not their hard-pressed suppliers.
Research shows only 11% of consumers blame supermarkets for Horsegate. The majority blame meat-processing and food-manufacturing companies.
Supermarkets went into Horsegate with a high level of public trust, and it seems they have emerged with that trust intact, or at any rate far from being in tatters.
When consumers were asked last year which companies they trusted ‘quite a lot or very much’, 39% rated supermarkets above newspapers, airlines, utility companies, banks and insurance companies. Only restaurants and online bookstores scored higher.

And now, as the fuss about Horsegate starts to die down, it seems to be meat that‘s left with its image in some disarray, not the retailers that have driven down price and quality, and who, some would argue, caused the problem in the first place.
According to a survey, 40% of consumers trust meat less after the scandal. They are particularly wary about processed meats; 30% of middle-class (ABC1) consumers claim to have stopped buying cheap or value-range meat products and 60% of them claim to have stopped buying processed meat products altogether.
So, how on earth have supermarkets emerged from Horsegate as – still – the darlings of shoppers?
It’s all to do with skillful brand management. For years consumers have gradually been losing faith in big companies and institutions, and their brands. This trend is expected to continue, fuelled by the banking crisis, the expenses scandal and phone hacking.
And we might add to that the pig industry’s own loss of face, when Red Tractor was shown to be powerless to stop the abuses recorded on camera at Harling Farm in East Anglia.
Horsegate, therefore, is just another scandal in a long line of events that have reduced consumers’ trust in brands.
As the largest player, and the first to be implicated, Tesco had the most to lose from Horsegate, but it cleverly used ‘soft power’ to turn away public wrath.
And its tactics worked. If research is to be believed those full-page apologies in the national papers were viewed favourably by consumers.
About 80% of consumers say they like it when big companies apologise when they get something wrong. Almost half of consumers now believe supermarkets have been open and honest about Horsegate. That’s not a bad result.

‘Soft power’ is the art of getting people to do what you want without coercing them. The aim is to get others to want the same outcomes as you. And that’s what Tesco boss Philip Clarke has achieved with his public display of humility.
Soft power is sometimes called ‘the second face of power’.This is the term attributed to the art of getting your own way by setting the agenda.
According to political and social theorist Stephen Lukes, you have real power if you can set the agenda because you are then the person who decides what will be argued about, therefore dictating the situation.
Tesco has wielded soft power and the second face of power with all the skill and resources that a large and prosperous organisation could bring to the problem of Horsegate.
Where does that leave pig producers’ dreams of sustainable supply chains in the wake of Horsegate?
To achieve a better price – that is, a significantly better price than is paid for cheap europork – British producers must convince retailers and consumers it’s worth paying more for ethically produced pork.
In this context, ethical can be taken to mean traceable, assured, higher-welfare and supportive of the British countryside and the British economy.
But, as a result of the recession, ethical considerations have taken a back seat. Few consumers (only 15%) say they’re willing to pay more for ethical products.
Over half of consumers agree brands should focus on value rather than social responsibility, and the same proportion favour supermarkets driving down prices from suppliers if it means a better deal for shoppers.
Research shows over half of consumers agreeing or strongly agreeing with the statement, ‘Companies should concentrate on giving value-for-money and good service to their customers – and minimise their social responsibility activities’.
AB consumers, who make up 22% of the population, are the most likely to be swayed by the quality story that underpins British pork. But while most producers would argue good quality food is invariably best value, even when it costs more, it’s a difficult message to get across when families have their own financial problems.
In 2010, 78% of consumers said they were ‘increasingly aware of the price of goods and services’. By 2012 this had risen to 85%.
So there are two take-home messages. It makes sense during periods of economic hardship to concentrate on shoppers with above-average incomes. And it also makes sense to watch the tactics of Tesco – and learn from them.

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