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Tesco is being forced to rebrand all its Clubcard materials after losing an appeal against a previous court ruling, which found that it infringed on German discounter Lidl’s trademark, specifically the use of a yellow square within a blue circle. One judge even admitted to ruling “with undisguised reluctance.”
For the average consumer, it seemed like a clear case of passing off, and Tesco estimates that rebranding will cost around $10.4 million. This seems relatively modest, considering Tesco’s widespread Clubcard signage, which supports its controversial dual pricing strategy. Sainsbury’s, too, is facing criticism for its similar Nectar promotions.
In the past, British supermarkets were adept at balancing low prices by pressuring suppliers, while simultaneously introducing premium lines like Tesco’s Finest and Sainsbury’s Taste the Difference. However, now they are under scrutiny for price-gouging during the cost of living crisis, with food inflation once reaching over 16%, and for allegedly cutting customer service to reduce prices. Sainsbury’s is attempting to cut $1.3 billion in costs, primarily by closing checkouts and reducing staff. It’s becoming increasingly evident that such cost-cutting often leads to poorer customer service.
Adding to their troubles, both Tesco and, more notably, Sainsbury’s experienced computer failures over the weekend, which disrupted deliveries and, in Sainsbury’s case, limited payments to cash in some stores. This isn’t the first time Sainsbury’s has faced such issues, at least in our local area.
Years ago, Tesco faced a similar crisis when Phil Clarke took over from long-serving CEO Terry Leahy, accusing his predecessor of running the business “too hot” by focusing excessively on cost-cutting rather than investing in the stores. It eventually took former Unilever executive Dave Lewis to resolve the situation.
Roberts at Sainsbury’s might be facing a similar accusation. The company has invested heavily in large, Aldi-style self-checkouts, but they seem to be favored mainly by shoplifters. Roberts, known for his cost-cutting expertise at Boots under US pharmacy chain Walgreens, might be realizing that emulating Boots’ retail model could pose significant challenges.