Shell's "Green" Ads Mislead

Oil and gas giant Shell have had some of their adverts in the UK banned for misleading claims about how clean their overall energy production is.The ban applies to one TV advert, a poster displayed in Bristol and a YouTube ad, all shown in 2022. 

 

The Advertising Standards Authority ruled they all left out information on Shell's more polluting work with fossil fuels. The selection of ads were likely to mislead consumers as they "misrepresented the contribution that lower-carbon initiatives played, or would play in the near future" compared with the rest of the company's operations. 

 

Shell however "strongly" disagreed with the ASA's findings. 

 

Whatever. The adverts cannot be shown in their current form again, the ASA decreed. 

 

One of the banned advertisements was a poster shown in Bristol, with the text "Bristol is ready for cleaner energy". It included text quoting the number of homes in the South West of England which used renewable electricity. 

 

The ASA maintained the poster was fallacious because it gave the impression that Shell as a whole were providing cleaner energy. 

 

A spokesperson for Shell said the ASA's decision "could slow the UK's drive towards renewable energy". 

 

"No energy transition can be successful if people are not aware of the alternatives available to them. That is what our adverts set out to show, and that is why we're concerned by this short-sighted decision", the spokesperson added. 

 

The ruling comes as ASA are combating companies overstating their environmental friendliness, known as "corporate greenwashing". They included “green” ads in the UK by Spanish oil company Repsol and Malaysia’s Petronas for not providing full information on their activities and carbon reduction strategies. 

 

And not just energy companies. Last year, ASA prohibited a Tesco plant-based burger ad, a Persil advert, and two HSBC adverts over their claims of environmental benefits, which the agency deemed "misleading".

Life in UK Has Gotten Worse

I blogged about how bad the situation is in the UK. My post “UK is Not in a Good Place Right Now” published Tuesday refers. 

Just to illustrate how the country is fast deteriorating, UK shoppers are being left speechless after seeing the price of Lurpak spreadable packs jump to almost £10! 

One picture circulating on social media shows a 1kg pack of Lurpak slightly salted butter that is being retailed at £9.35, although the supermarket it was being sold at is unknown. At Ocado, that size is on sale for £9, while their 750g packs are available for an eye-watering £7.25. Sainsbury’s are similarly selling the Lurpak butter at the same sky-high price. The same brand of butter is available at Tesco for £5.30, whilst Asda are selling it for £6.

One @NicCicutti tweeted on Tuesday that “it now takes an hour’s work on the Minimum Wage to buy a tub of Lurpak. Let that sink in…”. 

In fact, the price of Lurpak has risen so much compared to just a year earlier that one Asda shop is putting security tags around their tubs of the popular spreadable! 

That’s not all! Taking to Twitter this week, one user, @Celeste_Tam42 revealed images of protected cheese in Aldi and packaged lamb chops in Co-Op. And at Tesco, it is understood staff were forced to secure baby milk products after a spate of thefts.

These tags operate via a transmitter that sounds out an alert when it is removed from a shop. They are usually removed by staff when customers pay at the till. 

For sure, life in UK has gotten worse! 

Fresh data reveals that Brits are teetering on the edge of a debt crisis with one in five admitting that they will need to borrow money or use credit to help cover the cost of essentials. 

A shocking 42 percent of UK adults expect they will struggle to pay a regular bill such as their gas, electricity or council tax in 2022 with the figure rising to almost 50 percent amongst 25-49-year-olds, a YouGov survey showed. The data comes as the country braces for fresh energy price hikes, with bills expected to rise by £1,300 per year by October – a move which could plunge an estimated 10 million Brits into perceived poverty. 

“These figures make for grim reading and emphasise just how dire the coming months will be for financially vulnerable people”, commented Phil Andrew, Chief Executive of StepChange, a debt advice charity which commissioned the YouGov survey. 

With inflation running at 5.5 percent, financial insecurity is already on the rise with debt services reporting a surge in demand. Citizens Advice confirm they have supported more than 20,000 people with debts to their energy company, a 29 percent increase compared to last year. In the same period, they’ve also supported more than 55,000 people with referrals to food banks and charitable grants, an increase of more than one third. Ophelos, a debt resolution company which work with energy, financial services and buy now pay later firms, claim they have seen demand for their services increase by 40-50 percent since the start of 2022. 

And if that is not alarming enough, Brits are falling victim to predatory local lenders because they are unable to cover their living expenses. The Centre for Social Justice estimate that as many as 1.08 million Brits are indebted to a loan shark, 700,000 more people than the last official study identified. Almost two thirds of victims, some 62 percent in 2021, had an income of below £20,000 a year with 45 percent of victims saying they borrowed the money to cover everyday costs, including council tax, gas and electricity bills as well as essentials such as school uniforms and push chairs. 

UK is really in deep shit!

Vegan Leather Made From Mangoes

Ready or not, veganism is getting into the mainstream. And it does seem that more and more people are joining the plant-based movement. 

In fact, people cite one or more of three key motives for going vegan – animal welfare, environmental concerns and personal health – and this is accompanied by an endless array of new business startups, cookbooks, YouTube channels, trendy events and polemical documentaries (“advocacy films”). 

A sample of the ever-growing range of vegan products. Image credit: Jill Mead/The Guardian 

It is said the traditional food industry is already desperately trying to catch up with the flourishing grassroots demand. 

If you don't already know, Guinness have gone vegan when they stopped using fish bladders in their brewing process, after two and a half centuries. 

In the UK, restaurant chain, Wagamama have introduced a vegan menu. Pizza Hut have joined Pizza Express and Zizzi in offering vegan pizzas. Marks & Spencer and Pret a Manger have introduced vegan ranges. And Tesco have a position called director of plant-based innovation. 

The latest is a company in the Netherlands that are utilizing what would otherwise be wasted food to create vegan leather. That food is a fruit we know of as mango (Scientific name: Mangifera indica).

Fruitleather Rotterdam receive free leftover mangoes from the quality control sector of a Dutch fruit company and breaks it down to a puree to be turned into a durable, cruelty-free leather alternative:

 

What will they think of next?

Slowly and steadily, it looks like the world is embracing a plant-based lifestyle. I suppose that promotes sustainability and it can only be good for the battered and beleagured world.

Tesco: A Massive Bleed

Tesco plunged to an annual loss of £6.38 billion on Wednesday – the worst in their 96-year history. Their trading profit was £1.4 billion, in line with company guidance but less than half of the £3.3 billion made the year before and a third straight year of decline.

 

Badly wounded by an accounting scandal and a price war sparked by the march of discount groups Aldi and Lidl, the supermarket entity wrote down the value of their business by £7 billion – in fact, the writedown was larger than forecast – to reflect restructuring charges and the lower sales their stores were making. The statutory loss, which also includes stock writedowns, is one of the biggest in British corporate history. Already ratings agencies had reduced the company to “junk” status.

 

Dave Lewis, the chief executive parachuted in to mastermind a turnaround last year, described the loss as a “big significant number”. But the former Unilever executive insisted the supermarket was on the road to recovery.

 

From my various readings, I have compiled a small list of 5 mistakes that have cost Tesco billions:

 

1. Tesco haven’t kept up with the seismic shifts in the retail landscape – They need to recognise how much the retail landscape has changed, and adapt their strategy accordingly. They’ve been focused on ‘big box cathedrals’ until now – massive, hypermarket-style superstores – but there’s been a shift towards consumers preferring to shop at local convenience stores, or online.

 

2. Tesco have lost the plot on customer service – They must become more focussed on the customer experience, and in particular the interaction with their customers in-store. Stores need to be destinations and give people a reason to return. People buy from people.

 

3. Tesco should have closed their 200 underperforming stores – you need to be ruthless.

 

4. Tesco haven’t made the best use of their bigger retail outlets – Shopping habits have changed and people now do their grocery shopping online or at a smaller store, and Tesco have a number of larger stores that are costing a fortune. So a key priority for Tesco has to be making better use of these bigger stores. One option is to sub-let floor space to other retail brands, but Tesco could also look to use the space to better connect online and offline.

 

5. Tesco must embrace technology more – The opportunity for Tesco – and indeed all retailers – is to reimagine how their businesses work digitally. It shouldn’t be a thing that happens “online” – it should be a service layer that unites a customer experience, smooth’s out the buying process, and allows personalised benefits. With an epic database, they should look at how this data be turned into a tool for enhancing the customer experience, rather than targeting offers. After all, people’s shopping habits are changing; we are buying less stuff, more often. Why not take the evolution of shopping further with a recurring monthly fee that covers a regular drop off of staples to your door: a 21st Century Milkman. This commitment would allow better forecasting and the cost saving could be passed onto the customer.

Tesco have gone stale – it is as simple as that.

Tesco in Crisis

In the UK, Tesco’s descent into crisis and uncertainty has been dramatic.

 

In 2012, they announced their first fall in profits in 20 years (to £2.5 billion), boasted of new investment in a £1billion “makeover”, and served notice that they were rolling back their aggressive plans for expansion.

 

In 2013, pre-tax profits tumbled even more – by a cool 51%. In 2014, Tesco had to issue five profit warnings. Their market share tumbled to their lowest in 10 years. And in September, an accounting scandal blew up in their face, revealing a £263 million hole in expected profits.

 

So far this year, more grim news. Expansion plans representing forty-nine projects are to be cancelled. We are not just talking about the construction of 49 large supermarkets but that they are part of Tesco regeneration schemes for towns such as Kirkby, Bridgwater and Wolverhampton. And then forty-three existing supermarkets are set to close. It is very easy to come up with the reasons. It is either the retailer “quite simply could not afford” or they don’t fit the way people shop today.

 

Credit rating agency Moody’s even slashed Tesco’s investment rating to junk, saying discounters such as Aldi and Lidl posed a continuing problem, CEO Dave Lewis’s turnaround plan was not guaranteed to work and would take time to take effect.

 

Even the emblematic Cheshunt HQ in Hertfordshire is going to be axed. Plus the goal to reduce head office costs by 30% – part of a plan to shave £250 million from the group’s annual running costs – therefore, the number of job losses is going to be substantial.

 

In an attempt to compete even harder, the retailer launched price cuts involving 380 branded grocery lines, including Coca-Cola, Hovis bread and Tetley teabags – an average reduction of 26%. It has been said that Tesco’s prices had been “significantly out of line” with rivals. And the number of products on the shelves are to be pruned by 20,000 to just 70,000.

 

There is no quick fix to Tesco’s maladies and besides, they are not totally in charge of their own destiny due to the volatile and challenging markets that Tesco are operating in.

 

Tesco’s successful Asian hypermarket operations are spared for the moment. But disposing them cannot be ruled out. After all, the focus must always be on one’s home ground.

 

And there can’t be any sacred cows in business. You have got to do what you have got to do.

 

My MS6101 Strategic Marketing students can certainly learn from this post. Especially since Tesco is the subject of their case study this semester. Indeed, ALL my students should take notice of this blog because without a doubt, As I See It is informative, insightful and illuminating.

Horror Movie Coloring Book

Even coloring books can be labeled “For Adults Only”! Colour Me Good ARRGGGHHHH!! Horror Movie Colouring Book has sixteen pages of gory scenes from horror movies and thrillers. The blood-splattered cover sports an image of actress Janet Leigh screaming as she is stabbed to death in Psycho's infamous shower scene. Inside, you can find drawings from The Silence of the Lambs, A Nightmare on Elm Street, The Shining, and A Clockwork Orange, among others.

The Sellers at Tesco online marketplace was selling this particular book targeting children aged five to eight. It became aware of this negligent oversight and the coloring book has since been withdrawn from sale. The British retailer explained that the said book was placed in the wrong category when listed on its website by a third-party seller, i.e. online retailer Prezzybox. The company, based in Austrey, Warwickshire, said it normally listed the book as something that "may not be suitable for people under the age of 16". The book's publisher I Love Mel confirmed that it was actually aimed at adults.

I think the book is really cool. And I would love to get my hands on it. BTW, you can buy it from Amazon at £7.50 ($11) a copy.

At the Teaching Appreciation Day 2013 on Wednesday, SUBS colleague Shannon Jann Ng (left) won  Sunway University's award for teaching excellence. He certainly deserves the recognition! He's a great guy with an immense talent for engaging students. I know because his students speak highly of him! SUBS is very fortunate to have lecturers like him who gives his all to his students! And unlike me, he is the very description of humility.

Tesco's Virtual Stores

Even in retailing, innovation is important – check out Tesco’s brilliant idea – virtual stores – in South Korea:

Communications and Multimedia Minister Ahmad Shabery Cheek jeered, sneered and jibed the opposition, saying that the latter can no longer question the legitimacy of the election results and the government since its 89 Pakatan Rakyat MPs took their oath in Parliament on Monday. If PR believes that the GE13 results were flawed because of electoral fraud, then why capitulate? Why yield? Why surrender? Why?

Vice-President Education Karen Cheah was kind enough to offer me a speaking slot and I seized this rare opportunity. And so I delivered CC speech #4 (“The Happy Wake”) at the Taman Indrahana Toastmasters meeting yesterday and got voted as the Best Assignment Speaker. It was a fun meeting even if the speeches and evaluations were just so-so. A decent turnout although I cannot help but note that many members are not turning up regularly. A 7 over 10 score.

Tesco Also Withdrew from Japan

I happened to come across this Guardian article on Tesco dated August 31, 2011. After ploughing more than £250 million and eight years into trying to crack one of the toughest retail markets in the world, Tesco surrendered and announced that it was pulling out of Japan.

[At that point in time, this capitulation was described as a rare setback for the globe-trotting British retailer, which had spent much of the past decade planting its red, white and blue flag in countries, ranging from Hungary and Turkey to Thailand and Malaysia, and followed the promotion of Philip Clarke, the former head of its sprawling international business, to group chief executive. In fact, in January 2011, Tesco’s then chief executive Terry Leahy gave the thumbs-up to its international businesses, which delivered over half of the group's growth. According to one news account that I gleaned, Tesco’s US operations reported a 36.9 percent rise in total sales; Asia grew by 24.2 percent, driven by particularly good like-for-like performances in Thailand and China; and sales in Europe were up 5.6 percent, with like-for-like sales growth in every country where Tesco operated].

In Japan, the painful conclusion was made that Tesco couldn’t build a sufficiently scaleable business. The decision came after a review of the retailer's Asian arm, which also took in Korea, Thailand, Malaysia and China and had £11 billion sales in 2010.

Tesco is not the first foreign retailer to leave Japan with its tail between its legs. Boots the Chemists and France's Carrefour had also admitted defeat there.

A little bit of history. Tesco arrived in Japan in June 2003 when it acquired Tokyo convenience store chain C Two-Network for £173 million.

It made a bolt-on acquisition the following year, acquiring bankrupt convenience store chain Fre'c and taking on £16m of its debt. Analysts said it invested some £10m a year in Japan in a bid to turn the business into a major force in the country. However Tesco appears to have underestimated the difficulties it would counter in Japan, the world's third-largest grocery market after the US and China, with total sales of $356 billion. Gavin Rothwell, research manager at retail analysts IGD, said the country was "notoriously difficult" due to high operating costs and extremely demanding shoppers, with even market leaders Aeon and Ito Yokado battling to increase profits. Moreover, convenience stores dominate, particularly in the city centers, and a culture of 'immediacy' supports massive numbers of vending machines.

In 2010, Tesco had even developed an own-label range and even a fresh kitchen to supply fish and other local products to its stores but last year the business, which trades under the names Tsurakame, Tesco and Tesco Express, made an operating loss of £5 million on sales of £476 million.

Anyway, my eyes will be on Tesco in Malaysia. As each year passes, its stores look tired and tacky. How long for Tesco?

Tesco Quits US

Tesco is one of my favorite retailers to blog about – maybe because in the UK and even Malaysia, it is highly visible. But if you had been reading my posts, you will know that it has been facing many challenges in its own home market. One can be lulled into a false sense of comfort by assuming that Tesco is doing well overseas.

On the contrary.  UK’s biggest retailer wrote down the value of its global operations by $3.5 billion and announced plans to exit the US market, as it sought to rebuild after a year in which profit fell for the first time in two decades.

[Tesco also wrote down the value of its property in the UK by £804 million, reflecting a decision not to develop more than 100 sites, and its businesses in Poland, the Czech Republic and Turkey by £495 million, to account for a sharp downturn in demand].

In the US, Tesco is abandoning loss-making Fresh & Easy and this involves restructuring and other one-off costs of £1 bilion ($1.5 billion), and thereby admitting that its American dream is over.

Indeed, Tesco is only the latest British retailer to have attempted to leap over the pond – and drowned. The past couple of decades have seen rival supermarket Sainsbury's, as well as Marks & Spencer, WH Smith, Dixons and HMV all forced to beat a retreat.

Some have underestimated the costs of breaking into such a large and highly competitive market; others took on stores that were far too expensive or, like Tesco, hit the US just as it headed for economic downturn.

Many past transatlantic ventures have been the victim of arrogance and poor preparation, failing to understand the surprising differences between US and British shoppers. We may, broadly, speak the same language, listen to the same music and watch the same films, but other tastes and habits can differ quite dramatically.

It is interesting to note that Tesco spent 20 years considering a move into the US market, and put in two years of intensive on-the-ground research, even sending senior executives to live with Californian families to observe the way they shopped and ate. They built secret test stores and investigated the contents of Americans' fridges.

And yet, experts say Tesco ignored much of that research, deciding to set up the stores it wanted, rather than listening to its potential customers. For example, although US shoppers prefer to buy in bulk to save money, Fresh & Easy offered small pack sizes. The stores also stocked British-style ready meals unfamiliar to US shoppers and initially relied heavily on self-service tills. This was a big turn-off to American customers, who value good service. I call this, paying lip-service to marketing.

Dave McCarthy, a retail analyst at Investec says it is no coincidence that many UK retailers have failed across the Atlantic at a time when they are struggling at home. Both Sainsbury's and Marks & Spencer, for example, were forced to sell off their US businesses as they dealt with problems in the UK.

"It's a chicken-and-egg situation. Is it the distraction of going overseas that means management is no longer focused on the home market, or failure at home that drags down the business overseas?" asks McCarthy.

Still, a business the size of Tescohas to take calculated risks from time to time or risk stagnating. After five years of trying, Tesco did manage to turn Fresh & Easy into a store that enjoyed higher sales per square metre than a typical US supermarket, which shows it wasn't rejected outright by US shoppers.

McCarthy says: "I still honestly believe that if they had used the right strategy they could have got it right, and blown the market apart." I certainly agree.

UK Tesco Boss Walks

Failed strategies have ensured that UK Tesco’s sales will continue to disappoint and this means that the boss of its British operation, Richard Brasher is being forced to step down after only a year on the job.

The supermarket chain's group chief executive, Philip Clarke had mentioned that £500 million worth of price cuts hadn’t been yielding the desired results and so he is challenged to take on responsibility for the UK business.

This latest act of desperation demonstrates how important the UK market is to Tesco. Granted that Tesco has been aggressively expanding overseas but the UK remains Tesco’s most important market, generating two-thirds of sales.

Asia is the second biggest market at 17%, closely followed by continental Europe at 16%. The United States, where Tesco launched the Fresh and Easy chain in 2007, accounts for less than 1% of sales.

Because of the importance of the UK market, Tesco created the post of UK chief executive in 2010 for Brasher

Even as Clarke takes over, Tesco’s fortunes are not likely to get any better. I am not optimistic. If readers wish to know more about UK Tesco, I had featured the story of Tesco in three previous postings as follows: September 28, 2011; October 25, 2011; and February 29, 2012.

I went to No. 57 at The Boulevard in MidValley to attend the MAICSA Toastmasters meeting yesterday. It was a good meeting because there were four wonderful speeches to listen to although I could not say the same for the evaluations. And horror of horrors, the meeting started almost twenty minutes late! I would score this meeting a 4 out of a 10.

Tesco's Market Share Slips

This morning, I was involved in a research project that concerns shopping malls. I cannot divulge the details but it promises to be both an illuminating and interesting assignment. I can't wait to start.

I also read in The Telegraph today that Tesco's dominance of the supermarket industry in the UK slipped further. According to Kantar Worldpanel, Tesco's market share fell from 30.3 percent this time last year to 29.7 percent in the 12 weeks to February 19, a further decline on the 29.9 percent reported last month. This is the lowest level Tesco has experienced since May 2005.

This demonstrates that Tesco’s pricing initiatives – I had blogged about them, read my postings dated September 28 & October 25, 2011 – have not fared well, having failed to lure customers away from its competitors, particularly Asda and Sainsbury's, both of which gave out many vouchers.

As a result, Carolyn Bradley, the UK marketing director who oversaw the Big Price Drop Campaign has been replaced by David Wood, the commercial director of its Hungary business. Bradley moved to a new role as group brand director working for the group. I am stumped. If she could not succeed in marketing, what makes the supermarket group think she will succeed in branding? I hope people won’t think that failed marketers can simply re-invent themselves as branding experts! This is totally not true!

The Supermarket Wars

I had blogged about UK’s Tesco big price initiative on September 28, 2011 and in the three weeks following the Big Price Drop, the British supermarket claimed to have seen approximately one million additional transactions per week by customers purchasing products included in the campaign.

And Tesco is not resting on their laurels even after this price crusade. 

They have launched a Facebook app that allows customers to vote for the products they would like to see price reductions on. To have their say, customers have to visit the Tesco Facebook page (www.facebook.com/tesco), click on the Big Price Drop app and then choose five categories from a list of twenty-four options – that include categories such as shampoo and conditioner, canned soup, cooked meats, pet food and chocolate – for what they would most like to see as part of the Big Price Drop. 

As Richard Brasher, UK CEO of Tesco, explained the reasons for this latest foray into social media: “We are committed to doing all we can to help our customers and our new Facebook application will enable them to tell us directly where they most value reduced prices”.

Meanwhile, ASDA, UK’s second-biggest supermarket have slammed Tesco’s move, insisting that their Price Guarantee – which they launched in April last year – already promised to be 10% cheaper than rivals, and this “ended price wars” – communicating this through a print campaign. 

They also pledged to roll back 3,000 essential products and for a limited period, launched a £5 voucher for every customer who spends more than £40 online or instore. 

Morrisons also ran press ads to promote their Big Pay Day Price Crunch, which also started on September 26, 2011, and claiming to offer more than 1,000 half-price offers. Then they started another promotion – according to webpage

http://www.thisismoney.co.uk/money/bills/article-2050427/Supermarket-price-war-Are-Tesco-Sainsburys-Asda-cuts-real.html?ito=feeds-newsxml, published October 18, 2011 – by giving away £100 to three customers in every store, every day. 

Customers are entered into a daily price draw for every £1 they spend in store. The supermarket said that it would give away £2 million during their Morrisons Millions promotion – a number is printed on customers till receipts and customers can check online or in stores to see if they’ve won. 

Waitrose launched a value campaign – “1,000s of ways to great value” – and pledging to price-match more than 1,000 products against Tesco and pushing their 1,500-strong ‘Essential’ range, and the 1,000-plus products they place on special offer each week. They even had television ads supported by in-store activity as well as online display ads.

Sainsbury's introduced their Brand Match scheme to target it directly at Tesco and ASDA by matching prices of more than 12,000 branded grocery lines at the checkout. If customers find their basket of goods would have been cheaper at Tesco or ASDA, they will be given a coupon (valid for two weeks) to the value of the difference but note that the basket must be £20 or more in value to qualify.

The above is turning out to be ferocious price wars amongst supermarkets! 

Customers benefit, don’t they? Or are all these, as ASDA claims, merely “smoke and mirrors”?